Any help would be great. I need the work shown if possible, thanks in advance. (

Question

Any help would be great. I need the work shown if possible, thanks in advance.

(A)    Compute the predicted break-even point in dollar sales for year 2014 assuming the machine is installed and there is no change in the unit sales price.

Prepare a forecasted contribution margin income statement for 2014 that shows the expected results with the machine installed. Assume that the unit sales price and the number of units sold will not change, and no income taxes will be due.

(C) Compute the sales level required in both dollars and units to earn $150,000 of after-tax income in 2014 with the machine installed and no change in the unit sales price. Assume that the income tax rate is 40%.

Astro Co. sold 20,500 units of its only product and incurred a $67,750 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2014

Prepare a forecasted contribution margin income statement for 2014 that shows the expected results with the machine installed. Assume that the unit sales price and the number of units sold will not change, and no income taxes will be due.

Explanation / Answer

A)

Variable cost for 2014 = 5,84,250*(1-40%) = 350,550

Fixed Cost = 262500+155000 = $417,500

New Contributio margin = (779,000-350,550)/779,000 = 55%

predicted break-even point in dollar sales = fixed cost/New Contributio margin = 417,500/55% =$759,090.91

B)

Variable cost for 2014 = 5,84,250*(1-40%) = 350,550

Fixed Cost = 262500+155000 = $417,500

C. (Sales*Contribution margin -Fixed Cost)*(1-tax) = Profit

(sales*55% - 417,500)*(1-40%) = 150000

Sales =$1,213,636.364

Price per unit = 7,79,000/20500 = 38

Units required for Profit of $150,000 = $1,213,636.364/38 =31,938 Units

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.