Elliott Trophies makes three types of awards for organizations to give employees or team members. The following are its prices and costs: Sport Employee Celebrity Price per Variable Cost per Units Sold Unit per Year $ 24 80 656 Unit $ 16 516 36,000 9,000 3,000 Fixed costs of $439,000 per year include building and equipment costs, marketing costs, and the costs of administration. Elliott Trophies is subject to a 21 percent tax rate on income. Required: a. Given this information, how much will Elliott Trophies earn each year after taxes? b. Assuming the given sales mix is the same at the break-even point, at what sales revenue does Elliott Trophles break even? c. Assuming the given sales mix, at what sales revenue will the company earn $276,940 per year after taxes?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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A1

Elliott Trophies makes three types of awards for organizations to give employees or team members. The following are its prices and
costs:
Sport
Employee
Celebrity
Price per Variable Cost per Units Sold
Unit
per Year
$ 24
88
656
Req A
Unit
$ 16
Fixed costs of $439,000 per year include building and equipment costs, marketing costs, and the costs of administration. Elliott
Trophies is subject to a 21 percent tax rate on income.
68
516
Required:
a. Given this information, how much will Elliott Trophies earn each year after taxes?
b. Assuming the given sales mix is the same at the break-even point, at what sales revenue does Elliott Trophies break even?
c. Assuming the given sales mix, at what sales revenue will the company earn $276,940 per year after taxes?
d. Elliott Trophies is concerned about the future of the Celebrity trophy market, given recent cost-cutting by companies and is
considering becoming more specialized in the Sport and Employee market. If Elliott ophies drops the Cele
mode fixed costs
will fall to $409,000 per year. If It follows through with this plan, Elllott Trophies expects that the relative sales mix between the
Sport and Employee models will remain the same. That is, for every 36,000 units of the Sport model sold, Elliott Trophies would
expect to sell 9,000 units of the Employee model. How many units of the Sport and Employee models would Elliott Trophies have to
sell to achieve the same after-tax income it currently earns with the three models?
Req B
Complete this question by entering your answers in the tabs below.
Req C
36,000
9,000
3,000
Req D
Given this information, how much will Elliott Trophies earn each year after taxes?
Earnings
Transcribed Image Text:Elliott Trophies makes three types of awards for organizations to give employees or team members. The following are its prices and costs: Sport Employee Celebrity Price per Variable Cost per Units Sold Unit per Year $ 24 88 656 Req A Unit $ 16 Fixed costs of $439,000 per year include building and equipment costs, marketing costs, and the costs of administration. Elliott Trophies is subject to a 21 percent tax rate on income. 68 516 Required: a. Given this information, how much will Elliott Trophies earn each year after taxes? b. Assuming the given sales mix is the same at the break-even point, at what sales revenue does Elliott Trophies break even? c. Assuming the given sales mix, at what sales revenue will the company earn $276,940 per year after taxes? d. Elliott Trophies is concerned about the future of the Celebrity trophy market, given recent cost-cutting by companies and is considering becoming more specialized in the Sport and Employee market. If Elliott ophies drops the Cele mode fixed costs will fall to $409,000 per year. If It follows through with this plan, Elllott Trophies expects that the relative sales mix between the Sport and Employee models will remain the same. That is, for every 36,000 units of the Sport model sold, Elliott Trophies would expect to sell 9,000 units of the Employee model. How many units of the Sport and Employee models would Elliott Trophies have to sell to achieve the same after-tax income it currently earns with the three models? Req B Complete this question by entering your answers in the tabs below. Req C 36,000 9,000 3,000 Req D Given this information, how much will Elliott Trophies earn each year after taxes? Earnings
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