2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60%...

Question

Question

2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60% of sales revenue and a tax rate of 30%.

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

a)

Step 1:

Before tax income =After tax Income /[1-Tax rate]

= 35000 / [1-- .30]

= 35000 / .70

= 50000

Step 2 :

Contribution margin ratio = 1-variable cost ratio

= 1 -.60

= .40 or 40%

Sales revenue to achieve target income =[Fixed cost+ Before tax income /contribution margin ratio

= [100000 + 50000]/ .40

= 150000/.40

= $ 375000

sales revenue : 375000

INCOME STATEMENT
Sales revenue	375000
variable cost (375000*60%)	(225000)
contribution margin	150000
Fixed cost	(100000)
Income before tax	50000
less:Tax (50000*30%)	(15000)
Net income	35000

Add a comment

Answer 2

Similar Homework Help Questions

CVP Analysis Test Acctg 48 V2 Mona Company incurs $80,000 of annual fixed costs in manufacturing...

CVP Analysis Test Acctg 48 V2 Mona Company incurs $80,000 of annual fixed costs in manufacturing and selling a product that it sells for $16 per unit The variable costs of manufacturing and selling the product are $9 per unit a) The contribution margin per unit for the product is b) The breakeven point in units is c) The breakeven point in dollars is If Mona Company has a 30% income tax rate, and its management wants to earn an...
Please show all work A newly opened bed-and-breakfast projects the following Fixed costs 1. $8000 Variable...

Please show all work A newly opened bed-and-breakfast projects the following Fixed costs 1. $8000 Variable cost per occupied room per night Revenue per occupied room per night a. Write the expression for total cost b. Write the expression for total revenue c. How many rooms would have to be occupied to break even? d. Graph the Cost and Revenue equations e. What is the profit if 80 rooms are rented out? f. What is the breakeven if price per...
For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...

For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10, income tax rate of 20%, targeted net income of $10,000. Assume all other variables do not affect the cost volume profit relationship, if sales in units (quantities) increase, fixed cost per unit as a percentage of unit sales 1. increase 2. decrease 3. remain constants 4. we cannot find, we need more information

For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...

For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10, income tax rate of 20%, targeted net income of $10,000. Assume all other variables do not affect the cost volume profit relationship, if sales in units (quantities) increase, fixed costs per unit 1. increase 2. decrease 3. remain constants 4. we cannot find, we need more information
UNITS PRODUCED AND SOLD 50,000 100,000 200,000 TOTAL COSTS VARIABLE COSTS FIXED COSTS 50,000 TOTA...

UNITS PRODUCED AND SOLD 50,000 100,000 200,000 TOTAL COSTS VARIABLE COSTS FIXED COSTS 50,000 TOTAL COSTS COST PER UNIT VARIABLE COST FIXED COST 50.25 TOTAL COST PER UNIT ASSUME THE COMPANY SELLS 200,000 UNITS FOR S1/UNIT PREPARE A CONTRIBUTION FORMAT INCOME STATEMENT 1 cost behavior patterns include: (aj variable costs (b)fixed costs (c) mixed costs (d) all of the above 2 fixed costs: (a) remain the same in total (b) vary per unit (c) remain constant per unit (d) vary...
Helicopter Rides.The price of each ticket is $150 and the variable costs average $60 per person....

Helicopter Rides.The price of each ticket is $150 and the variable costs average $60 per person. Steve's monthly fixed costs are $58,500. 1. What is Steve's contribution margin per ride? 2. How many tours must the company conduct in a month to break even? 3. What sales revenue is needed to produce a net profit of $36,000 per month? 4. What is Steve's contribution margin ratio? 5. If annual sales increase by $100,000, by what amount will operating income increase?...

CVP and Sensitivity Analysis (Single Product). Victoria, Inc., has annual fixed costs totaling $240,000 and variable...

CVP and Sensitivity Analysis (Single Product). Victoria, Inc., has annual fixed costs totaling $240,000 and variable costs of $6 per unit. Each unit of product is sold for $30. Victoria expects to sell 12,000 units this year (this is the base case). Required: Find the break-even point in units. How many units must be sold to earn an annual profit of $100,000? (Round to the nearest unit.) Find the break-even point in sales dollars. What amount of sales dollars is...
Cready and Co., currently has annual sales of $12,000,000, its variable costs are 60% of sales...

Cready and Co., currently has annual sales of $12,000,000, its variable costs are 60% of sales and total fixed costs $4,200,000. By how much will Cready's annual operating income increase if current sales increase by 10%7
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...

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...

DSL Co. plans to sell 200,000 special soccer balls with fixed costs of $400,000 and variable...

DSL Co. plans to sell 200,000 special soccer balls with fixed costs of $400,000 and variable expenses at 60% of sales. To have a net income of $100,000 DSL Co. management must set the sales price at what amount?

2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60%...

Homework Answers

Add Answer to:
2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60%...

Post as a guest

Earn Coins

CVP Analysis Test Acctg 48 V2 Mona Company incurs $80,000 of annual fixed costs in manufacturing...

Please show all work A newly opened bed-and-breakfast projects the following Fixed costs 1. $8000 Variable...

For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...

For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...

UNITS PRODUCED AND SOLD 50,000 100,000 200,000 TOTAL COSTS VARIABLE COSTS FIXED COSTS 50,000 TOTA...

Helicopter Rides.The price of each ticket is $150 and the variable costs average $60 per person....

CVP and Sensitivity Analysis (Single Product). Victoria, Inc., has annual fixed costs totaling $240,000 and variable...

Cready and Co., currently has annual sales of $12,000,000, its variable costs are 60% of sales...

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...

DSL Co. plans to sell 200,000 special soccer balls with fixed costs of $400,000 and variable...

2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60%...

Homework Answers

Add Answer to: 2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60%...

Post as a guest

Earn Coins

Add Answer to:
2. A bed and breakfast place has annual fixed costs of $100,000 variable costs of 60%...