Blanchard Company manufactures a single product that sells for $110 per unit and

Question

Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company targets an annual after-tax income of $440,000. The company is subject to a 20% income tax rate. Assume that fixed costs remain at $308,000.

(1) Compute the unit sales to earn the target after-tax net income

.Choose Numerator:/Choose Denominator:=Units to achieve target/=Units to achieve target 0

(2) Compute the dollar sales to earn the target after-tax net income.

Choose Numerator:/Choose Denominator:=Dollars to achieve target/=Dollars to achieve target

Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company targets an annual after-tax income of $440,000. The company is subject to a 20% income tax rate. Assume that fixed costs remain at $308,000.

(1) Compute the unit sales to earn the target after-tax net income

.Choose Numerator:/Choose Denominator:=Units to achieve target/=Units to achieve target 0

(2) Compute the dollar sales to earn the target after-tax net income.

Choose Numerator:/Choose Denominator:=Dollars to achieve target/=Dollars to achieve target

Explanation / Answer

SP 100 After tax income 440000 VC 88 Tax Rate 20% Contribution 12 Pre tax income 550000 =440000/(1-20%) Fixed Cost 308000 Break Even point 25666.67 units Required Sales 71500 units =25667+550000/12 Required Sales 7150000 Sales Revenue

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