B Company recently invested $1,230,000 to be able to produce a new product. Thetarget operating income desired from the new product line is $246,000 annually. B Companyanticipates annual sales will be 1,600 units and plans revenue of $1,000 per unit. How muchshould the markup percentage as a percentage of cost be for B Company to achieve their targetoperating income?a. 15.38%b18.17%C. 84.63%20.00%

Total Revenue:The company anticipates selling 1600 units at $1,000 per unit, resulting in a total…

Answered: B Company recently invested $1,230,000…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 3PB

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Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at 275 per unit. Product costs include: Variable selling expense is 14 per unit; fixed selling and administrative expense totals 290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of 420,000. 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. (Round to the nearest unit.) 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a 420,000 target net income be higher or lower than the units calculated in Requirement 3? Calculate the number of units needed at the new tax rate. (Round dollar amounts to the nearest dollar and unit amounts to the nearest unit.)
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BBB Company reported the results from sales of 5,000 units of Product Y for April 2022. See image.Assume that BBB plans to increase the selling price of Product Y by 10% in June 2022. How many units of the product would have to be sold to maintain an operating income of P20,000?

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