CVP analysis, income taxes. Brooke Motors is a small car dealership. On average, it sells a car for$27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 inrent and utilities and $68,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid acommission of $600 for each car they sell. Brooke Motors also spends $13,000 each month for local advertisements.Its tax rate is 40%.Required 1. How many cars must Brooke Motors sell each month to break even?2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operatingincome? How many cars must be sold each month to reach the target monthly net income of $51,000? 3-21 CVP analysis, income taxes. Brooke Motors is a small car dealership. On average, it sells a car for$27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 inrent and utilities and $68,000 for salespeople's salaries. In addition to their salaries, salespeople are paid acommission of $600 for each car they sell. Brooke Motors also spends $13,000 each month for local adver-tisements. Its tax rate is 40%.Required1. How many cars must Brooke Motors sell each month to break even?2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operatingincome? How many cars must be sold each month to reach the target monthly net income of $51,000?|

Break even sales is the sales level at which the firm is able to recover all its costs that is the…

Answered: CVP analysis, income taxes. Brooke…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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CVP analysis, income taxes. Brooke Motors is a small car dealership. On average, it sells a car for
$27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 in
rent and utilities and $68,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a
commission of $600 for each car they sell. Brooke Motors also spends $13,000 each month for local advertisements.
Its tax rate is 40%.
Required 1. How many cars must Brooke Motors sell each month to break even?
2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operating
income? How many cars must be sold each month to reach the target monthly net income of $51,000?

3-21 CVP analysis, income taxes. Brooke Motors is a small car dealership. On average, it sells a car for
$27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 in
rent and utilities and $68,000 for salespeople's salaries. In addition to their salaries, salespeople are paid a
commission of $600 for each car they sell. Brooke Motors also spends $13,000 each month for local adver-
tisements. Its tax rate is 40%.
Required
1. How many cars must Brooke Motors sell each month to break even?
2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operating
income? How many cars must be sold each month to reach the target monthly net income of $51,000?|

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