Question

In: Accounting

Presented below is Oxford Ltd.’s income statement for 20x5: Sales (38149 units) $875002 Variable costs -375735...

Presented below is Oxford Ltd.’s income statement for 20x5:

Sales (38149 units)

$875002

Variable costs

-375735

Contribution Margin

499267

Fixed Expenses

-213274

Operating Income

285993

Income tax expense

-108677

Net Income

$177316


How many units must Oxford Ltd. sell in order to generate net income equal to $262438?

Select one:

a. 69067 units

b. 58628 units

c. 48640 units

d. 36349 units

Solutions

Expert Solution

Correct answer-----------------(c) 48640 units

Working

Net profit required after tax is $262438 so it means income before tax required will be (262438/62%= $423288) $423288.

The tax rate is 38% so if we deduct 38% tax from 423288 we get 262438.

A Sale Price per unit (875002/38149) $                   22.94
B Variable Cost per Unit (375735/38149) $                     9.85
C=A - B Unit Contribution $                   13.09
D Total Fixed cost $        636,561.00
E=D/C Breakeven point in units                     48,640

ekkarill92 answered 1 year ago
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