Sales to Reach After-Tax Profit Lockwood Company currently sells its deadbolt lo

Question

Sales to Reach After-Tax Profit

Lockwood Company currently sells its deadbolt locks for $30 each. The locks have a variable cost of $10, and the company's annual fixed costs are $150,000. The company's tax rate is 40 percent.

Required:

Calculate the number of locks that must be sold to earn an after-tax profit of $24,000.
units

Sales to Reach After-Tax Profit

Lockwood Company currently sells its deadbolt locks for $30 each. The locks have a variable cost of $10, and the company's annual fixed costs are $150,000. The company's tax rate is 40 percent.

Required:

Calculate the number of locks that must be sold to earn an after-tax profit of $24,000.
units

Explanation / Answer

the number of locks that must be sold to earn an after-tax profit of $24,000.

= [(24000/0.6) + 150000]/(30-10)

=[40000+150000]/20

=9500 UNITS

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