Preston products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics. Sales Price: $36.00 per gallon Variable costs: $12.00 per gallon Fixed costs: 504,000 per month Preston products is subject to an income tax rate of 21 percent. a. How many gallons must Preston products sell every month to break even? b. How many gallons must Preston products sell to earn a monthly operating profit of $75,840 after taxes?
Preston products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics. Sales Price: $36.00 per gallon Variable costs: $12.00 per gallon Fixed costs: 504,000 per month Preston products is subject to an income tax rate of 21 percent. a. How many gallons must Preston products sell every month to break even? b. How many gallons must Preston products sell to earn a monthly operating profit of $75,840 after taxes?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Preston products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics.
Sales Price: $36.00 per gallon
Variable costs: $12.00 per gallon
Fixed costs: 504,000 per month
Preston products is subject to an income tax rate of 21 percent.
a. How many gallons must Preston products sell every month to break even?
b. How many gallons must Preston products sell to earn a monthly operating profit of $75,840 after taxes?
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