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After-Tax Profit Target Olivian Company wants to earn $540,000 in net (after-tax) income...

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Accounting

After-Tax Profit Target

Olivian Company wants to earn $540,000 in net (after-tax) income next year. Its product is priced at $350 per unit.

Product costs include:

Direct materials $105.00

Direct labor $77.00

Variable overhead $17.50

Total fixed factory overhead $450,000

Variable selling expense is $14 per unit; fixed selling and administrative expense totals $300,000. Olivian has a tax rate of 40 percent.

1.Calculate the before-tax profit needed to achieve an after-tax target of $540,000.

$________

2.Calculate the number of units that will yield operating income calculated in Requirement 1 above. If required, round your answer to the nearest whole unit.

__________units

3.Calculate an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. Do NOT round interim calculations and, if required, round your answer to the nearest dollar.

Olivian CompanyIncome StatementFor the Coming Year

Total

Sales $_________

Total variable expense $__________

Total contribution margin $__________

Total fixed expense $___________

Operating income $__________

Less: Income taxes $___________

Net income $______________

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