Blanchard Company manufactures a single product that sells for $200 per unit and whose total variable costs are $148 per unit. The company's annual fixed costs are $640,000. The sales manager predicts that annual sales of the company's product will soon reach 41,000 units and its price will increase to $210 per unit. According to the production manager, variable costs are expected to increase to $150 per unit, but fixed costs will remain at $640,000. The income tax rate is 20%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes? Prepare a forecasted contribution margin income statement
Blanchard Company manufactures a single product that sells for $200 per unit and whose total variable costs are $148 per unit. The company's annual fixed costs are $640,000. The sales manager predicts that annual sales of the company's product will soon reach 41,000 units and its price will increase to $210 per unit. According to the production manager, variable costs are expected to increase to $150 per unit, but fixed costs will remain at $640,000. The income tax rate is 20%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes? Prepare a forecasted contribution margin income statement
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blanchard Company manufactures a single
product that sells for $200 per unit and whose
total variable costs are $148 per unit. The
company's annual fixed costs are $640,000. The
sales manager predicts that annual sales of the
company's product will soon reach 41,000 units
and its price will increase to $210 per unit.
According to the production manager, variable
costs are expected to increase to $150 per unit,
but fixed costs will remain at $640,000. The
income tax rate is 20%. What amounts of pretax
and after-tax income can the company expect
to earn from these predicted changes? Prepare
a forecasted contribution margin income
statement
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