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In: Accounting

Q3 Ibrahim Corporation manufactures product A.  Following is information for next year’s operations, based on an estimated...

Q3

Ibrahim Corporation manufactures product A.  Following is information for next year’s operations, based on an estimated volume of 40,000 units:

Expected revenues                                    $2,000,000

Unit costs:

Direct materials                                              $  7

Direct labor                                                       16

Variable overhead                                               6

Fixed manufacturing overhead                           3

Total                                                          $32

Other fixed costs:

Administration, marketing, etc.             $230,000

Income tax rate                                                    30%

a.   What is the breakeven point for next year?

b.   What is next year’s projected after-tax income?

c.   Chose a target after-tax income.  Estimate the number of units that must be sold to reach this target.

Solutions

Expert Solution

Answer: -

a. Break even Point 16667 units
b. Projected After tax income $ 343,000.00
c. Desired Unit Sales 63333 units

please find the below table useful to compute the desired results: -

ekkarill92 answered 1 year ago
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