Question

Blanchard Company manufactures a single product that sells for $140 per unit and whose total variable costs are $112 per unit. The company's annual fixed costs are $400,400. Management targets an annual pretax income of $700,000. Assume that fixed costs remain at $400,400.

 (1) Compute the unit sales to earn the target income. 

 (2) Compute the dollar sales to earn the target income.

Blanchard Company manufactures a single product that sells for $160 per unit and whose total variable costs are $128 per unit. The company's annual fixed costs are $625,000. The sales manager predicts that annual sales of the company's product will soon reach 39,500 units and its price will increase to $195 per unit. According to the production manager, variable costs are expected to increase to $135 per unit, but fixed costs will remain at $625,000. The income tax rate is 20%. What amounts of pretax and after- tax income can the company expect to earn from these predicted changes? 

Prepare a forecasted contribution margin income statement. 

Answer 1

Selling Price Vouble Le Me - Contribution 40 112 29 ! Unils to earn the target Inwone fixed cost + Targer profil contribution faunit - 400400 + 700.000 28 - 39300 unib- Hence it eary organy tw no sell 3 2300 units fre par gincome. they co.com 2 & sales to earn target gnome a F\tes 1. o+ + Телец froku Prosii Volume Ratio * at tu Ratio a contrimetion fee R osselling the fee - 44ло > ҶооҶw to o 2e 6 $5502,0w --- they comfor Hence it can earn wmpany sell in & tu, no lu tax 55020o hume 2

Blanchard onlany torcast contribution Margin gnwrie spectement الطلا | & la unit tening price Hariable cust 2370000 a len txtbutin angin contribution for 39500 unin 39500 fured cost the tax on one Tax2017. basovo 4sovo e २५१०० After tax Income 1396000