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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%