Less variable cost 400000 contribution margin 600000

Info icon This preview shows pages 4–6. Sign up to view the full content.

Less Variable Cost…………………………………………… 400,000 Contribution margin………………………………………… 600,000 Fixed cost…………………………………………………… 450,000 Net operating income……………………………………… .... 150,000 4. Compute the sales level required in both dollars and units to earn $140,000 of after-tax income in 2014 with the machine installed and no change in the unit sales price. Assume that the income tax rate is 30%. Requires Sales Level
Image of page 4

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

5 LirianoAU05a02 = FC + TP / CM ratio = 450,000 - 140,000 / .30 = $ 1,083,333 or 1,083,333 / $50 = 21,667 units. 5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume an income tax rate of 30%. Forecasted contribution margin income statement Sales ………………………………………………………….. $1,083,350 Less Variable Cost ……………..…………………...……… $433,340
Image of page 5
6 LirianoAU05a02 Contribution Margin………………………………………… $650,010 Less Fixed Cost………………………………………………. $450,000 Net Operating Income………………………………………. $200,010 References Capella University (Ed.). (2014). BUS4061: Managerial accounting principles [Custom text]. Boston, MA: McGraw-Hill Create. ISBN: 9781308231648.
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern