1) Break even Volume = Fixed Expenses/Contribution margin Ratio | |
Break even Volume =265,000/15% | $ 1,766,667 |
2) Before Tax Income = after Tax income/( 1 - tax rate) | $ 208,571 |
Before Tax Income =$146,000/(1 - 30%) | |
3) Service revenue required to earn target after-tax income of $146,000 | |
Service revenue = ($265,000 + $208,571.43)/15% | $ 3,157,143 |
4) | |
A change in the tax rate will have no effect on the firm's break-even point. At the break-even point, the firm has no profit and does not have to pay any income taxes |
Hydro Systems Engineering Associates, Inc. provides consulting services to city water authorities. The consulting firm's contribution...
Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm's contribution-margin ratio is 30 percent, and its annual fixed expenses are $240,000. The firm's income tax rate is 45 percent. Required: 1. Calculate the firm's break-even volume of service revenue. 2. How much before-tax income must the firm earn to make an after-tax net income of $136,000? 3. What level of revenue for consulting services must the firm generate to earn an after-tax net income...
Hydro Systems Engineering Associates, Inc. provides consulting services to city water authorities. The consulting firm's contribution- margin ratio is 15 percent, and its annual fixed expenses are $285.000. The firm's income tax rate is 30 percent Required: 1. Calculate the firm's break-even volume of service revenue. 2. How much before-tax income must the firm earn to make an after-tax net income of $154,000? 3. What level of revenue for consulting services must the firm generate to earn an after-tax net...
Hydro Systems Engineering Associates, Inc. provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 15 percent, and its annual fixed expenses are $225,000. The firm’s income-tax rate is 30 percent. Required: Calculate the firm’s break-even volume of service revenue. How much before-tax income must the firm earn to make an after-tax net income of $130,000? What level of revenue for consulting services must the firm generate to earn an after-tax net income of $130,000? Suppose the...
Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 15 percent, and its annual fixed expenses are $285,000. The firm’s income-tax rate is 30 percent. Required: 1. Calculate the firm’s break-even volume of service revenue. 2. How much before-tax income must the firm earn to make an after-tax net income of $154,000? 3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of...
just need service revenue, i cannot figure it out Exercise 7-33 Consulting Firm; CVP Analysis with Income Taxes (Appendix) (LO 7-1, 7-4, 7-11) Hydro Systems Engineering Associates, Inc. provides consulting services to city water authorities. The consulting firm's contribution margin ratio is 30 percent, and its annual fixed expenses are $280,000. The firm's income tax rate is 45 percent. Required: 1. Calculate the firm's break-even volume of service revenue. 2. How much before tax income must the firm earn to...
In the year 2017, Pyramid Consulting had the following contribution income statement: PYRAMID CONSULTING Contribution Income Statement For the Year 2017 Sales revenue $ 1,300,000 Variable costs Cost of services $ 420,000 Selling and administrative 200,000 (620,000) Contribution margin 680,000 Fixed Costs -selling and administrative (285,000) Before-tax profit 395,000 Income taxes (36%) (142,200) After-tax profit $ 252,800 (a) Determine the annual break-even point in sales revenue. Round contribution margin ratio to two decimal places for your calculation. Round final answer...
Effect of taxes on break-even and target volume Machine INC desires an after-tax income of $500,000. It has fixed costs of $2,500,000, a unit sales price of $300, and unit variable costs of $150; it is in the 40% tax bracket. Required: A. What amount of the pre-tax income is needed to earn an after-tax income B. What target volume sales revenue must be reached to earn the $500,000 C. Assuming that this is a single-product firm, how many units...
Multiple Product Planning with Taxes In the year 2017, Pyramid Consulting had the following contribution income statement: PYRAMID CONSULTING Contribution Income Statement For the Year 2017 Sales revenue $ 1,300,000 Variable costs Cost of services $ 420,000 Selling and administrative 200,000 (620,000) Contribution margin 680,000 Fixed Costs -selling and administrative (285,000) Before-tax profit 395,000 Income taxes (36%) (142,200) After-tax profit $ 252,800 (a) Determine the annual break-even point in sales revenue. Round contribution margin ratio to two decimal places for...
Break-Even in Sales Revenue, Variable-Costing Ratio, Contribution Margin Ratio, Margin of Safety Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows. Sales $1,240,000 Less: Variable expenses 706,800 Contribution margin $533,200 Less: Fixed expenses 425,000 Income before taxes $108,200 Less: Income taxes 43,280 Net income $64,920 Required: 1. What is Hammond’s variable cost ratio? Enter your answer as a decimal value rounded to two decimal places. What is the contribution...
Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $10.0 per hour for each type of service, but lawn maintenance has higher variable costs ($4.0 per hour) than garden maintenance ($2.0 per hour) because of fuel expenses incurred to operate lawn-mowing equipment. All employees are paid a fixed monthly salary. A contribution format income statement for a recent month for the two services appears below. During the month, 8,000...