Riyadh Electricity Company manufactures chandeliers . Following is information for next year’s operations, based on an...

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Accounting

Riyadh Electricity Company manufactures chandeliers . Followingis information for next year’s operations, based on an estimatedvolume of 20,000 units: 4 marks
Expectedrevenues                                   $1,000,000
Unit costs:
Directmaterials                                        $ 6.25
Directlabor                                                 15.75
Variableoverhead                                         5.50
Fixed manufacturingoverhead                     2.50
Total                                                    $30.00
Other fixed costs:
Administration, marketing,etc.            $225,000
Income taxrate                                                   30%
a.   What is the breakeven point for next year?
b.   What is next year’s projected after-taxincome?
c.   Suppose the managers set a target after-taxincome of $100,000. Estimate the number of units that must besold.

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4.5 Ratings (1001 Votes)

Solution a Total fixed costs 20000250 225000 275000 Contribution margin per unit Selling price per unit Variable cost per unit 100000020000 625 See Answer

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