Jassim Compagny is producing only one product. Two types of direct materials are used to produce this product: direct material type A and direct material type B. The estimated data for Jassim Compagny is as following: Sales $90,000 Costs: Direct materials type A $40,000 Hourly employees 15,000 Manager’s salary 10,000 Direct materials type B 5,000 Marketing 10,000 Total Costs 80,000 Budgeted pretax profit $ 10,000 Compute the revenues needed to achieve a target after-tax income of $30,000. The income tax rate is 20%. What is the margin of safety in revenue?
Q1. Jassim Compagny is producing only one product. Two types of direct materials are used to produce this product: direct material type A and direct material type B.
The estimated data for Jassim Compagny is as following:
Sales $90,000
Costs:
Direct materials type A $40,000
Hourly employees 15,000
Manager’s salary 10,000
Direct materials type B 5,000
Marketing 10,000
Total Costs 80,000
Budgeted pretax profit $ 10,000
- Compute the revenues needed to achieve a target after-tax income of $30,000. The income tax rate is 20%.
- What is the margin of safety in revenue?
Step by step
Solved in 3 steps with 3 images
