CVP: Before- and After-Tax Targeted Income Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $92.00 per helmet, and fixed costs are $1,158,000. The tax rate is 25 percent. Last year, 14,000 helmets were sold. Required: 1. What is Head-Gear's net income for last year? 4. Suppose Head-Gear wants to earn after-tax net income of $590,850. How many units must be sold? In your computations, round dollar amounts to the nearest dollar. Round your final answer to the nearest whole unit. 5. Suppose the income tax rate rises to 35 percent. How many units must be sold for Head-Gear to earn after-tax income of $610,740? Round to the nearest whole unit.
CVP: Before- and After-Tax Targeted Income
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $92.00 per helmet, and fixed costs are $1,158,000. The tax rate is 25 percent. Last year, 14,000 helmets were sold.
Required:
1. What is Head-Gear's net income for last year?
4. Suppose Head-Gear wants to earn after-tax net income of $590,850. How many units must be sold? In your computations, round dollar amounts to the nearest dollar. Round your final answer to the nearest whole unit.
5. Suppose the income tax rate rises to 35 percent. How many units must be sold for Head-Gear to earn after-tax income of $610,740? Round to the nearest whole unit.
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