Question

13 Phillips sells a single product. They want to achieve an after-tax income target of $60,000 next year. Their tax rate is 20%. What is the necessary sales level to achieve the target after-tax income? Price 20.00 Variable expenses per unit $ 12.00 Annual fixed expenses 270,000 $ S A. $ 428,571 B. $ 575,000 C. $ 825,000 DS 862,500 E. None of the above 14 Reynolds Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, the conversion cost is $168,000, among which fixed manufacturing overhead cost equals to $60,000, and its unit costs are as follows: Direct material (as 25% of prime cost) Sales commissions Fixed selling and admin expense S S S 2.00 1.50 5.00 Total product costs when Reynolds Company produces and sell 12.000 units are A. S 213,600 B. S 156,000 C. S 225,600 DS 141,600 E. None of the above

show me the formula and steps please ?

Answer 1

Q13.
Answer is D. $ 862,500
Explanation:
After tax Income target: $ 60,000
Tax rate: 20%
Target pre-tax profit = 60,000 /80% = 75000
Contribution margin ratio:
Selling price		20
Less: Variable cost per unit	12
Contribution margin per unit	8
Divide: Selling price		20
Contribution margin ratio	40%
Annual Fixed cost		2,70,000
Add: Target Pre-tax profits	75,000
Target contribution		3,45,000
Divide: Contribution margin ratio	40%
Target sales level in dollars	862500
Q14.
Answer is A. $ 213,600
Explanation:
Total conversion cost at 10,000 units	1,68,000
Less: Fixed cost			60,000
Total Variable conversion cost at 10,000 units	1,08,000
Divide: Units			10,000
Variable conversion cost per unit	10.8
Total Product Cost at 12,000 units
Direct material (12,000 units @2)		24,000
Variable conversion cost (12,000 units @10.80)	1,29,600
Fixed conversion cost			60,000
Total Product Cost at 12,000 units		2,13,600