Question

ENGR 3970 Homework Assignment #5 - Fall 2019, Due Mon Nov 4 Note: Show all of your work to arrive at a final result. 1.) A company is producing a product that has the following data: volume of sales per year = 300,000 units selling price per unit = $100 variable cost-$60 per unit fixed costs per year = $600,000 book depreciation = $400,000 tax depreciation = $500,000 debt interest - $100,000 tax rate = 40% With the above data determine (a) Before-tax profit (b) After-tax profit (c) Break-even yearly volume of sales (d) Break-even selling price (e) Plot the break-even chart
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Answer 1

a) & b
Sales	$ 30,000,000.00
Less Variable cost	$ 18,000,000.00
Contribution Margin	$ 12,000,000.00
Less: Fixed Cost	$      600,000.00
EBITDA	$ 11,400,000.00
Less Book Depreciation	$      400,000.00
EBIT	$ 11,000,000.00
Less: Interest	$      100,000.00
EBT (Before Tax Profits)	$ 10,900,000.00	(a)
Less: Tax @ 40%	$   4,360,000.00
Net income(After tax profits)	$   6,540,000.00	(b)
C) BEP = fixed cost/(SP - VC)
BEP (Volume) = 600,000/(100 -60)	15000.00	Units
d) Break Even Sales Price = (Total Fixed Costs/Production Volume ) + Variable Cost per Unit
For 100,000 units
Break even Sales Price = ($600000/300,000 units) + $60 =	$               62.00	Break even selling price

Profit by Sales Volume $30,000 Total Cost $25,000 Total Revenue Fixed Cost $20,000 $15,000 $10,000 $5,000 $0 Sales Volume 00000E 00008 000092 00000 000002 000000 00008 00009 0000 00002 00000 00008 00009 0000 00000 0 Thousands of Dollars