Oradell Company sells its single product at a price of $60 per unit and incurs me following variable costs per unit of productOradell's annual fixed costs are $880,000. and Oradell is subject to a 30% income tax rate The annual sales revenue required by Oradell Company in order to achieve after- tax net income of $224,000 for the year is
Answer(s): A
The $224.000 of after-tax net income is equal to 70% (the complement of the tax rate) of pie-tax income. Thus, pre-tax net income must equal $320,000 ($224.000 ÷ .7), and taxes must be $96,000. If sales equal $60 times X units and variable costs are $40 times X units, the following is the equation to solve for units sold (X):At a selling price of $60 each, the total revenue is $3,600,000 (60,000 units x $60).
Oradell Company sells its single product at a price of $60 per unit and incurs the following van able costs per unit of product:Oradell's annual fixed costs are $880.000, and Oradell is subject to a 30% income tax rate. If prime costs increased by 20% and all other values remained the same. Oradell Company's contribution margin (to the nearest whole percent) is?
Answer(s): D
Prime costs are direct materials and direct labor because these two elements totaled $28 ($16 + $12) before the increase, the new total is $33.60 ($28 x 1.2). In other words, prime costs increases by $5.60, and total variable costs increase to $4560. Subtracting $45.60 from the $60 selling price leaves a contribution margin of $14.40.The contribution margin percentage thus becomes 24% ($14.40. $60).
The budget data for the Bid well Company appear below.Budgeted operating income $ 90,000. The Bid well Company's breakeven sales in units are?
The breakeven point in units is found by dividing the fixed costs ($210,000) by contribution margin per unit ($3). Variable costs are $700,000 at 100,000 units, or $7 per Unit. Selling price is $10 per unit. Dividing $210,000 by $3 per unit results in a breakeven point of 70,000 units
The budget data for the Bid well Company appear below.If the Bid well Company is subject to an effective income tax rate of 40%, the number of units Bid well must sell to earn an after-tax profit of $90,000 is?
Answer(s): B
Because the tax rate is 40%, the $90.000 after-tax profit is 60% of pre-tax income. Thus, toll earn an income of $90,000 after tax, the pre-tax income must be $150000 ($90,000 .6), Dividing the fixed costs of $210,000 plus the desired before-tax income of $150,000 by the $3 contribution margin per unit gives a breakeven point of 120,000 units,
The budget data for the Bid well Company appear belowIf fixed costs increased $31 .500 with no other cost or revenue factors changing, the breakeven sales in units is
The breakeven point equals fixed costs divided by the contribution margin per unit. The new total for fixed costs is $241,500, and the contribution margin per unit is still $3 The breakeven point is 80,500 units.
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