(CVP; taxes) Golf Glider makes gasoline-powered golf carts. The selling price is $5,000 each, and costs are as follows:
Cost | Per Unit | Total |
Direct material | $2,000 | |
Direct labor | 625 | |
Variable overhead | 325 | |
Variable selling | 50 | |
Annual fixed production overhead | $250,000 | |
Annual fixed selling and administrative | 120,000 |
Golf Gliderâs income is taxed at a 40 percent rate.
a. How many golf carts must Golf Glider sell to earn $600,000 after tax?
b. What level of revenue is needed to yield an after-tax income equal to 20 percent of sales?
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