Problem:
(CVP, taxes) Joan Michaels has a small plant that makes playhouses. She sells them to local customers at $3,000 each. Her costs are as follows:
|
Costs
|
Per Unit
|
Total
|
|
Direct material
|
$1,200
|
|
|
Direct labor
|
400
|
|
|
Variable overhead
|
150
|
|
|
Variable selling
|
50
|
|
|
Fixed production overhead
|
$200,000
|
|
Fixed selling and administrative
|
80,420
|
Joan is in a 35 percent tax bracket.
a. How many playhouses must she sell to earn $247,507 after taxes?
b. What level of revenue is needed to yield an after-tax income equal to 20 percent of sales?