Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 67P
a.
To determine
Calculate the sales revenue per month to reach the break-even of Company O.
b.
To determine
Calculate the sales revenue per month to earn profit after tax of $40,950 of the company O. Given that the tax rate is 35%.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
bed
Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs.
Sales price
Variable costs
Fixed costs
$127.00 per service
89.00 per service
119,548 per year
Cruse Cleaning is subject to an income tax rate of 22 percent.
Required:
a. How many cleaning services must Cruse Cleaning sell in a year to break even?
ook
b. How many cleaning services must Cruse Cleaning sell in a year to earn an annual operating profit of $32,604 after taxes?
a Required sales in a year to break even
int
rences
b. Required sales in a year to earn an annual operating profit of $32,604 after taxes:
cleaning services
cleaning services
s
CVP analysis, income taxes. The Home Style Eats has two restaurants that are open 24 hours a
day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee
to full meals. The average sales check per customer is $8.75. The average cost of food and other variable
Costs for each customer is $3.50. The income tax rate is 36%, Target net income is $117,600.
Jau
Compute the revenues needed to earn the target net income.
How many customers are needed to break even? To earn net income of $117,600?
Compute net income if the number of customers is 170,000.
1.
2.
162
3.
Chapter 3 Solutions
Fundamentals of Cost Accounting
Ch. 3 - Write out the profit equation and describe each...Ch. 3 - What are the components of total costs in the...Ch. 3 - How does the total contribution margin differ from...Ch. 3 - Compare cost-volume-profit (CVP) analysis with...Ch. 3 - Fixed costs are often defined as fixed over the...Ch. 3 - Prob. 6RQCh. 3 - What is the margin of safety? Why is this...Ch. 3 - Prob. 8RQCh. 3 - Write out the equation for the target volume (in...Ch. 3 - How do income taxes affect the break-even...
Ch. 3 - Why is it common to assume a fixed sales mix...Ch. 3 - What are some important assumptions commonly made...Ch. 3 - Prob. 13CADQCh. 3 - Prob. 14CADQCh. 3 - The typical cost-volume-profit graph assumes that...Ch. 3 - The assumptions of CVP analysis are so simplistic...Ch. 3 - Prob. 17CADQCh. 3 - Consider a class in a business school where volume...Ch. 3 - Prob. 19CADQCh. 3 - Prob. 20CADQCh. 3 - Consider the Business Application,...Ch. 3 - Consider the Business Application,...Ch. 3 - Prob. 23CADQCh. 3 - Profit Equation Components Identify each of the...Ch. 3 - Profit Equation Components Identify the letter of...Ch. 3 - Basic Decision Analysis Using CVP Anus Amusement...Ch. 3 - Basic CVP Analysis The manager of Dukeys Shoe...Ch. 3 - CVP AnalysisEthical Issues Mark Ting desperately...Ch. 3 - Basic Decision Analysis Using CVP Derby Phones is...Ch. 3 - Prob. 30ECh. 3 - Basic Decision Analysis Using CVP Warner Clothing...Ch. 3 - Basic Decision Analysis Using CVP Refer to the...Ch. 3 - Prob. 33ECh. 3 - Prob. 34ECh. 3 - Analysis of Cost Structure Spring Companys cost...Ch. 3 - CVP and Margin of Safety Bristol Car Service...Ch. 3 - CVP and Margin of Safety Caseys Cases sells cell...Ch. 3 - Prob. 38ECh. 3 - Prob. 39ECh. 3 - Refer to the data for Derby Phones in Exercise...Ch. 3 - Refer to the data for Warner Clothing in Exercise...Ch. 3 - CVP with Income Taxes Hunter Sons sells a single...Ch. 3 - CVP with Income Taxes Hammerhead Charters runs...Ch. 3 - Prob. 44ECh. 3 - Prob. 45ECh. 3 - Prob. 46ECh. 3 - Prob. 47ECh. 3 - CVP Analysis and Price Changes Argentina Partners...Ch. 3 - Prob. 49PCh. 3 - CVP AnalysisMissing Data Breed Products has...Ch. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - CVP AnalysisSensitivity Analysis (spreadsheet...Ch. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Extensions of the CVP ModelSemifixed (Step) Costs...Ch. 3 - Prob. 57PCh. 3 - Extensions of the CVP ModelTaxes Odd Wallow Drinks...Ch. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Extensions of the CVP ModelTaxes Toys 4 Us sells...Ch. 3 - Extensions of the CVP AnalysisTaxes Eagle Company...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Extensions of the CVP ModelMultiple Products and...Ch. 3 - Extensions of the CVP ModelTaxes With Graduated...Ch. 3 - Prob. 71PCh. 3 - Financial Modeling Three entrepreneurs were...
Knowledge Booster
Similar questions
- Assuming your fixed cost per year are $10,000 are you making enough profit to pay that amount ?arrow_forward8. The Holiday Card Company, a producer of specialty cards, has asked you to complete several calculations based upon the following information: Income tax rate 30% Selling price per unit $6.60 Variable cost per unit $5.28 Total fixed costs $46,200.00 Required: a. What is the breakeven point in cards? b. What sales volume is needed to earn an after-tax net income of $13,028.40? c. How many cards must be sold to earn an after-tax net income of $18,480?arrow_forwardAssume that Ocean King Products sells three varieties of canned seafood with the following prices and costs. Selling Priceper Case Variable Costper Case Fixed Costper Month Variety 1 $ 15 $ 12 – Variety 2 16 14 – Variety 3 21 14 – Entire firm – – $ 48,400 The sales mix (in cases) is 60 percent Variety 1, 25 percent Variety 2, and 15 percent Variety 3. Required: a. At what sales revenue per month does the company break even? b. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per month will the company earn $50,245 after taxes assuming the same sales mix?arrow_forward
- CVP analysis, income taxes. The Express Banquet has two restaurants that are open 24-hours aday. Fixed costs for the two restaurants together total $459,000 per year. Service varies from a cup of coffeeto full meals. The average sales check per customer is $8.50. The average cost of food and other variablecosts for each customer is $3.40. The income tax rate is 30%. Target net income is $107,100.Required 1. Compute the revenues needed to earn the target net income.2. How many customers are needed to break even? To earn net income of $107,100?3. Compute net income if the number of customers is 170,000.arrow_forwardThe Body Fit Company sells high-energy bars to supermarkets for P135 per year. Variable cost is P45 per bar and annual fixed costs are P1,440,000. Determine: a. The breakeven point in pesos and units. b. The volume required to eam a before-tax profit of P360,000. The volume required to eam an after 40% tax retum of 15%. The price would be charged to earn a before tax profit of P300,000 if Body Fit Company can sell 30,000 bars. C. d.arrow_forwardWhite Lake Inc. produces and sells a single product. Data concerning that product appear below: Selling price per unit $ 230.00 Variable expense per unit $ 103.50 Fixed expense per month $ 518,650 Required: a. What is the minimum amount of sales revenues in dollars to break even? b. Assume the company's monthly target profit is $12,650. Determine the number of units that White Lake needs to sell to attain this target profit?arrow_forward
- Provide this question solution general accountingarrow_forwardMunabhaiarrow_forwardVerify your answer by preparing a continuation format income statement at the target sales level 4. compute the company's matgin of saftery in both dollar and percentage terms 5. What is the company's cm ration? If the company can sell more units thereby increasing sales by 77000 per month and there is no change in fixed expenses by how much would you expect monthly net operating income to increase?arrow_forward
- Biscayne's Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows: Rental price per day Variable cost per day Standard $ 40.00 Deluxe $48.00 15.50 20.20 Biscayne's total fixed cost is $21,000 per month. Required: Determine Biscayne's new break-even point in each of the following independent scenarios: 1. Product mix is 40/60. 2. Sales price increases on both models by 15 percent. (Assume a product mix of 50/50.) 3. Fixed costs increase by $3,200. (Assume a product mix of 50/50.) 4. Variable costs increase by 20 percent. (Assume a product mix of 50/50.)arrow_forwardEquate Inc. sells products with a cost of $25,000 during the year to customer for $55,000. It is Equate’s policy to accept returns up to 60 days after the date of purchase. Equate estimates that there is a 60% probability that returns will be 3% of sales and a 40% probability that returns will be 2.5% of sales. What is the transaction price under a) expected value method b) most likely amount method? Choices: A: $53,460 B: $53,350 A: $53,350 B: $53,460 A: $53,460 B: $54,450 A: $54,450 B: $53,460 A: $53,350 B: $53,350arrow_forwardPlease help me figure a-earrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT