Problem:
Young Corporation has determined the contribution margin ratio is 35% and the income tax rate is 40%.
Required:
Question 1: Assume break-even volume in dollars is $1,500,000. What are total fixed costs?
Question 2: Assume Young Corporation wants after-tax net income of $300,000. What volume of sales in dollars is necessary to achieve this net income?
Note: Be sure to show how you arrived at your answer.