chap 9

# chap 9 - PROBLEM 11-1 Max Company produces a single product...

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PROBLEM 11-1 Max Company produces a single product that it sells wholesale for \$100 per unit. Variable costs per unit amount to \$80 and total fixed costs are \$100,000. Assume the applicable tax rate is 40%. Required: a. Find the break-even point in sales dollars. b. Find the sales dollars needed to generate \$20,000 in net income before taxes. c. Find the sales dollars needed to generate \$24,000 in net income after taxes. d. Find the sales dollars needed to generate a 9% return on sales dollars after taxes. e. Find the sales dollars needed to generate an 18% return on sales after taxes. PROBLEM 11-2 The VM Company produces and sells a line of Camcorders with a sales price and budgeted unit costs as follows: Sales price \$600 Direct materials costs per unit 170 Direct labor costs per unit 50 Factory overhead costs: Variable per unit 90 Total Fixed 400,000 Selling and Adm. costs: Variable per unit sold 30 Total Fixed 120,000 Required: 1. Determine VM Company's conventional linear break-even point in units. 2. Assume a tax rate of forty percent. Using conventional linear cost volume profit analysis, determine the number of units that VM Company would have to produce and sell to generate net income of \$78,000 after taxes. 3. Now suppose the company wants to earn 10% on sales revenue after taxes. Using conventional linear cost volume profit analysis, determine the

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## This note was uploaded on 01/15/2011 for the course ACCT 3053 taught by Professor Ltl during the Spring '10 term at Troy.

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chap 9 - PROBLEM 11-1 Max Company produces a single product...

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