ABC Corp has fixed costs of $200,000, and variable costsas a percentage of sales are 70%. If the company currentlymakes $1,000,000 in sales, what amount of sales must beachieved to earn a net income of $90,000?

Step 1: Definition of Required Sales for Target Net IncomeThe required sales level refers to the…

Answered: ABC Corp has fixed costs of $200,000,…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...

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Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Gimpy Corp. has variable costs that are 75% of sales, current sales of $800,000, and fixed costs of $150,000. What is the required sales amount to achieve a $85,000 net income?
Gimpy Corp. has variable costs that are 75% of sales, current sales of $800,000, and fixed costs of $150,000. What is the required sales amount to achieve a $85,000 net income? Answer
What are the required sales?
What will the pretax income equal if sales are $400,000 on these financial accounting question?
Galactica Company has fixed costs of P100,000 and breakeven sales of P800,000. Based on this relationship, what is its projected profit at P1,200,000 sales?
Future Corporation has a single product; the product selling price is $100 and variable costs are $60. The company’s fixed expenses are $10,000. What is the company’s break-even point in sales dollars?
Suppose ABC Corp’s break-even point is revenues of $1,100,000. Fixed costs are $660,000. Calculate the contribution margin percentage. Calculate the selling price if variable costs are $16 per unit. Suppose 75 000 units are sold, calculate the profit earned. Willo the company beprofitable if able to sell 30,000 units? Explain. What should the company do to increase its profit above break-even point.
A company's fixed operating costs are $740,000, its variable costs are $2.25 per unit, and the product's sales price is $4.65. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs? Round your answer to the nearest whole number. units
Fine Leather Enterprises sells its single product for $129.00 per unit. The firm’s fixed operating costs are $473,000 annually, and its variable operating costs are $86.00 per unit. Find the firm’s operating breakeven point in units. Label the x-axis “Sales (units)” and the y-axis “Costs/Revenues ($)”, and then graph the firm’s sale revenue, total operating cost, and fixed operating cost functions on these axes. In addition, label the operating breakeven point and the areas of loss of profit (EBIT).
McKee Corporation has annual fixed costs of $12 million. Its variable cost ratio is 0.60.a. Determine the company’s break-even dollar sales volume.b. Determine the dollar sales volume required to earn a target profit of $3 million.
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ABC Corp has fixed costs of $200,000, and variable costs as a percentage of sales are 70%. If the company currently makes $1,000,000 in sales, what amount of sales must be achieved to earn a net income of $90,000?