CVP: Before- and After-Tax Targeted Income
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $240 per helmet. Variable costs are $96.00 per helmet, and fixed costs are $1,158,000. The tax rate is 25 percent. Last year, 14,000 helmets were sold.
Required:
1. What is Head-Gear's net income for last
year?
$
2. What is Head-Gear's break-even revenue? In
your computations, round the contribution margin ratio to two
decimal places.
$
3. Suppose Head-Gear wants to earn before-tax
operating income of $915,600. How many units must be sold? Round to
the nearest whole unit.
units
4. Suppose Head-Gear wants to earn after-tax
net income of $654,300. How many units must be sold? In your
computations, round dollar amounts to the nearest dollar. Round
your final answer to the nearest whole unit.
units
5. Suppose the income tax rate rises to 35
percent. How many units must be sold for Head-Gear to earn
after-tax income of $670,020? Round to the nearest whole
unit.
units
CVP: Before- and After-Tax Targeted Income Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges...
CVP: Before- and After-Tax Targeted Income Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $92.00 per helmet, and fixed costs are $1,158,000. The tax rate is 25 percent. Last year, 14,000 helmets were sold. Required: 1. What is Head-Gear's net income for last year? $ 2. What is Head-Gear's break-even revenue? In your computations, round the contribution margin ratio to two decimal places. $ 3. Suppose Head-Gear wants to...
Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $73 and have variable costs of $44 each. The motorcycle helmets are priced at $205 and have variable costs of $145 each. Total fixed cost for Head-First as a whole equals $50,350 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 4,850 bicycle helmets and 1,940 motorcycle helmets. Required: 1. Form a package of...
Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $76 and have variable costs of $43 each. The motorcycle helmets are priced at $205 and have variable costs of $130 each. Total fixed cost for Head-First as a whole equals $59,850 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 5,250 bicycle helmets and 2,100 motorcycle helmets. Required: 1. Form a package of...
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QUESTION 1 Head-First Company plans to sell 5,100 bicycle helmets at $72 each in the coming year. Variable cost is 62% of the sales price; contribution margin is 38% of the sales price. Total fixed cost equals $50,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Head-First must make to earn operating income of $73,120 by using the point in sales equation. 2. Check your answer by preparing a contribution margin...
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