Friday, October 10, 2014

What level of revenue is needed to yield an after-tax income equal to 20 percent of sales?

(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 Glider̢۪s 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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