Question

Net Income Planning Superior Corporation sells a single product for $60 per unit, of which $36 is contribution margin. Fixed costs total $108,000 and net income before income tax is $28,800 Determine the following a. The present sales volume in dollars. $ 0 b. The break-even point in units. 0 units c. The sales volume in units necessary to attain a net income before income tax of $39,600 0 units d. The sales volume in units necessary to attain a net income before income tax equal to 20% of sales revenue. 0 e. The sales volume in units necessary to attain an after-tax net income of $43,200 if the tax rate is 40% units units Check

Answer 1

Answers

A= The present sales volume in $ = $228,000

A	Fixed cost ,	$ 1,08,000.00
B	Operating income	$      28,800.00
C=A+B	Contribution margin'	$ 1,36,800.00
D	Contribution margin per unit	$              36.00
E=C/D	Units sold	3,800
F	Sales price per unit	$              60.00
G=E x F	Total sales	$ 2,28,000.00

B Breakeven units = 3000

A	Fixed cost	$ 1,08,000.00
B	Contribution margin per unit	$              36.00
C=A/B	Breakeven units	3,000

C Sales to attain netr income of $ 39600 = 4100 units

A	Fixed cost	$ 1,08,000.00
B	Profit required	$      39,600.00
C=A+B	Total Contribution required	$ 1,47,600.00
D	Contribution margin per unit	$              36.00
E=C/D	Breakeven units	4,100

D Units to attain 20% profit on sales = 4500 Units

A	Fixed cost	$ 1,08,000.00
B	Profit required	$      54,000.00
C=A+B	Total Contribution required	$ 1,62,000.00
D	Contribution margin per unit	$              36.00
E=C/D	Breakeven units	4,500

	Current sales	%
Sales revenue	$ 2,70,000.00	100%
Variable cost (60-36)	$ 1,08,000.00	40%
Contribution margin'	$ 1,62,000.00	60%
Fixed cost	$ 1,08,000.00	40%
Operating income before taxes	$      54,000.00	20%

20% profit means the fixed cost must be equal to 40% of sales and then we can get a profit of 20% on sales.

So Sales must be 108000/40%