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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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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