Strongsville company wishs to solve this question general Accounting Strongsville Company wishes to earn after-tax net income of$18,000. Total fixed costs are $84,000, and the contributionmargin per unit is $6.00. Strongsville's tax rate is 40%. What isthe number of units that must be sold to earn the targeted netincome?A. 14,000B. 17,000C. 19,000D. 21,500

Step 1: Define Sales of A Target ProfitIn accounting, the sales (in units or in dollars) of a target…

Answered: Strongsville Company wishes to earn…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13E

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Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at 275 per unit. Product costs include: Variable selling expense is 14 per unit; fixed selling and administrative expense totals 290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of 420,000. 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. (Round to the nearest unit.) 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a 420,000 target net income be higher or lower than the units calculated in Requirement 3? Calculate the number of units needed at the new tax rate. (Round dollar amounts to the nearest dollar and unit amounts to the nearest unit.)
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Strongsville Company wishes to earn after-tax net income of $18,000. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. Strongsville's tax rate is 40%. What is the number of units that must be sold to earn the targeted net income? A. 14,000 B. 17,000 C. 19,000 D. 21,500