Blanchard company manufactures a single product that sells for 240 per unit and
ID: 2420703 • Letter: B
Question
Blanchard company manufactures a single product that sells for 240 per unit and whose total variable costs are 192 per unit . The company targets an annual after tax income of 780000. The company is subject to 35% income tax rate . Assume that fixed costs remain 734400 .1. Compute unit sales to earn the target after tax income 2. Compute the dollar sales to earn the target after tax net income 4. 10.00 points value Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $192 per unit. The company targets an annual after-tax income of $780,000. The company is subject to a 35% income tax rate. Assume that fixed costs remain at S734.400. S 1,200,000 (1) Compute the unit sales to earn the target after-tax net income. Fixed costs plus pretax income unitUnits to achieve target 1,273400 26.530 unils (2) Compute the dollar sales to earn the target after-tax net income Dolars to achieve target 1697.867 Fixed costs plus pretax income 1.273.400 75%) , S
Explanation / Answer
Answer:1
Fixed cost plus pretax income/Contribution margin per unit=units to achieve target
=(734400+1200000)/(240-192)
=1934400/48
=40300 units
Pretax income=After tax income/(1-tax rate)
=780000/(1-0.35)
=$12,00,000
Income taxes=Pretax income*Income tax rate
=1200000*35%
=420000
Answer:2
Fixed cost plus pretax income/Contribution margin ratio=Dollars to achieve target
=(734400+1200000)/(0.20)
=$9672000
Contribution ratio=(48/240)*100
=20%
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