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7. OPTIONAL BONUS QUESTION (15 BONUS POINTS) Garbol Company has signed a contract that requires...

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Accounting

image 7. OPTIONAL BONUS QUESTION (15 BONUS POINTS) Garbol Company has signed a contract that requires them to produce and sell 60,000 units for $8 per unit. A regression model was run using 27 observations to measure total costs as a function of units. It is as follows: Total costs =$100,000+$6 per unit The standard error of the estimate is $8,000. Required: a. Calculate the following assuming certainty: i. Breakeven in units and dollars ii. Sales quantity needed to obtain an after-tax profit of $24,000. Assume that a 40 percent tax rate is used for only part ii. iii. Sales in dollars needed to obtain a pretax profit equal to 10 percent of sales. b. Calculate the following assuming uncertainty: i. What is the range of incomes that would be expected with 90 percent confidence? ii. What is the probability that the firm will make a profit next year

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