Kator Inc. manufactures industrial components. One of its products is KB-96, which is used in automobile manufacturing. The selling price and cost data for KB-96 are given below (per unit cost data are based on an annual production of 20,000 units):
Selling price $150
Direct material $20
Direct labor 15
Variable manufacturing overhead 12
Fixed manufacturing overhead 30
Variable selling 3
Fixed selling and administrative 10 90
Unit profit $60
Required: Answer each of the following parts. Show your calculations and label your answer. Treat each part independently from any other part.
A. If Kator expects to sell 10,000 units, what will its profit be before tax?
B. If Kator wishes to make an after tax profit of $350,000, how many units of KB-96 must it sell (note that all numbers above are pre-tax)? Assume a tax rate of 30 percent.