Assume that Ocean King Products sells three varieties of canned seafood with the following prices and costs. Selling Price per Case Variable Cost per Case Fixed Cost per Month Variety 1 $ 15 $ 12 – Variety 2 16 14 – Variety 3 21 14 – Entire firm – – $ 48,400 The sales mix (in cases) is 60 percent Variety 1, 25 percent Variety 2, and 15 percent Variety 3. Required: a. At what sales revenue per month does the company break even? b. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $50,245 after taxes assuming the same sales mix?
Assume that Ocean King Products sells three varieties of canned seafood with the following prices and costs. Selling Price per Case Variable Cost per Case Fixed Cost per Month Variety 1 $ 15 $ 12 – Variety 2 16 14 – Variety 3 21 14 – Entire firm – – $ 48,400 The sales mix (in cases) is 60 percent Variety 1, 25 percent Variety 2, and 15 percent Variety 3. Required: a. At what sales revenue per month does the company break even? b. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $50,245 after taxes assuming the same sales mix?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Assume that Ocean King Products sells three varieties of canned seafood with the following prices and costs.
| Selling Price per Case |
Variable Cost per Case |
Fixed Cost per Month |
|||||||
| Variety 1 | $ | 15 | $ | 12 | – | ||||
| Variety 2 | 16 | 14 | – | ||||||
| Variety 3 | 21 | 14 | – | ||||||
| Entire firm | – | – | $ | 48,400 | |||||
The sales mix (in cases) is 60 percent Variety 1, 25 percent Variety 2, and 15 percent Variety 3.
Required:
a. At what sales revenue per month does the company break even?
b. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $50,245 after taxes assuming the same sales mix?
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