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.
