A PowerPoint Demonstration

GIVEN DATA: SOLUTIONS

Sales units 500 bicycles
Income Statement Part (1) Part 2:
For the month of June % Contribution Margin
Sales $ 250,000 Less: Fixed Expenses
Less: Variable expenses 150,000 Operating income (loss)
Contribution Margin 100,000
Less: Fixed Expenses 80,000 Part 3:
Operating income (loss) $ 20,000 Increased Contribution Margin

Required: Part 4:
Part 1 Increased contribution margin
Complete the per unit and % columns of the contribution format income statement Increased fixed expenses
Part 2 Increased (decreased) operating income
Estimate operating income if Racing Bicycles sells 430 bicycles
Part 3 Part 5:
How much will contribution margin increase if sales increase by $ 50,000 Expected contribution margin
Part 4 Current contribution margin
Increase in sales units (500 to 540) 40 Increased (decreased) contribution margin
Increase in monthly Advertising $ 10,000
Part 5 Part 6:
Increase in variable costs per unit $ 10 Expected contribution margin
Sales units 580 Current contribution margin
Part 6 Increased (decreased) contribution margin
Reduction in selling price per bicycle $ 20 Increased fixed expenses
Increase in monthly Advertising $ 15,000 Increased (decreased) operating income
Sales units 650
Part 7 Part 7:
Sales commission per bicycle sold $ 15 Expected contribution margin
Decrease in sales salaries $ 6,000 Current contribution margin
Sales units 575 Increased (decreased) contribution margin
Add: Decreased fixed expenses
Increased (decreased) operating income
Part 8
Sales units 150 Part 8:
Increase in monthly operating income $ 3,000 Selling price per bicycle

Part 9 Part 9:
Using the contribution margin method, calculate Racing Bicycle's breakeven point in sales dollars Breakeven sales
and sales units Breakeven sales units

Part 10 Part 10:

Using the contribution margin method, calculate how many bicycles need to be sold to Number of bicyles to earn target profit
earn an operating income of: $ 100,000
Part 11 Part 11:
Desired after-tax profit $ 100,000 Sales units
Income tax rate 40%
Part 12:
Part 12 Margin of Safety
Actual Sales $ 250,000 Margin of Safety %
Margin of Safety in units

Part 13 Part 13:

Increase in sales 10% Degree of Operating Leverage
Income from 10% increase in sales

Part 14 Part 14:

Income Statement Breakeven total sales dollars
For the month of June
Bicycles Carts Total
Sales $ 250,000 100.0% $ 300,000 100.0% $ 550,000 ### Income Statement at the Breakeven Point
Less: Variable expenses 150,000 60.0% 135,000 45.0% 285,000 ### Bicycles Carts Total
Contribution Margin $ 100,000 40.0% $ 165,000 55.0% 265,000 ### Sales
Less: Fixed Expenses 170,000 Less: Variable expenses
Operating income (loss) $ 95,000 Contribution Margin
Less: Fixed Expenses
Sales Mix (in dollars of sales) 45% 55% ### Operating income (loss)

Part 15 Part 15
Income Statement
Sales Mix % Weighted CM
For the month of June CM per unit for units Per Unit
Bicycles Carts Total Weighted CM per unit
Per Unit Per Unit Bicycles
Sales $ 250,000 $ 500 $ 300,000 $ 200 $ 550,000 Carts
Less: Variable expenses 150,000 300 135,000 90 285,000
Contribution Margin $ 100,000 $ 200 $ 165,000 $ 110 265,000
NO "ROUNDUP" function
Less: Fixed Expenses 170,000 Breakeven in Total Units required with multi
products
Operating income (loss) $ 95,000 Distribution of total units at Breakeven:
Bicycles
Sales Units 500 1,500 2,000 Carts
K81: NO "ROUNDUP" function required with multi products
Exercise 4-3
In March, Mitchell Limited had sales of $250,000 (50,000 units), total variable expenses of $190,000, and total fixed expenses of $36,000.

Units Sold 50,000

By Unit %
Sales $ 250,000 Sales 250,000.00 5.00 100.00% 270,000.00
Variable expenses $ 190,000 variables 190,000.00 3.80 76.00%
Fixed Expenses $ 36,000 CM 60,000.00 1.20 24.00%
Fixed Costs 36,000.00
Required: Oper. Inc. 24,000.00
1. What is the company’s CM ratio? 24% Correct

Sales Correct $ 250,000

Variable expenses Correct 190,000
Contribution Margin Correct 60,000
Fixed Expenses Correct 36,000
Operating Income Correct $ 24,000

2. Estimate the change in the company’s operating income if it increased its total sales by $20,000.
Increase in total sales $ 20,000

Increase in Sales $ 20,000 Correct

x CM ratio 24% Correct
Increase in CM and Operating Income $ 4,800 Correct
Exercise 4-4
Data for Moorefield Corporation are shown below:
Selling price $ 90 100%
Variable expenses 63 70% Sales $ 247,500 $ 74,250
Contribution Margin $ 27 30%
Fixed expenses are $65,000 per month, and the company is selling 2,750 units per month.
Fixed Expenses monthly $ 65,000
Units per month 2,750

Required:
1. The marketing manager argues that a $5,000 increase in the monthly advertising budget would
increase monthly sales by $12,000. Should the advertising budget be increased?
Increase in monthly advertising $ 5,000
Increase in monthly sales $ 12,000

Incremental Contribution Margin $ 3,600 Correct

Incremental Fixed Expenses 5,000 Correct
Increase (decrease) in Operating Income $ (1,400) Correct

Should the advertising budget be increased? No Correct

2. Refer to the original data. Management is considering using higher-quality components that
would increase the variable cost by $4 per unit. The marketing manager believes the higher-quality
product would increase sales by 20% per month. Should the higher-quality components be used?

Increase in variable cost per unit $ 4

Increase in total sales 20%
C19: choose the correct answer from the drop down list provided
Exercise 4-12
Kelly Company’s most recent contribution format income statement is shown below:
Sales units 60,000
Per Unit
Sales $ 600,000 $ 10.00 100%
Variable expenses 360,000 6.00 60%
Contribution Margin 240,000 $ 4.00 40%
Fixed Expenses 100,000
Operating Income $ 140,000

Required:
(a) Prepare a new contribution format income statement (below) under each of the following conditions 1. to 4. (consider each case independently):
(b) Using the "incremental approach" determine the Increase (decrease) in Operating Income under each of the following conditions 1. to 4. (consider each case independently)
1. The number of units sold increases by 30%.
Increase in units sold 30%

2. The selling price decreases by $1 per unit, and the number of units sold increases by 20%.
Selling price decrease $ 1.00
Number of units sold increase 20%

3. The selling price increases by $1 per unit, fixed expenses increase by $20,000, and the number of units sold decreases by 10%.
Selling price increase $ 1.00
Number of units sold decrease 10%
Fixed Expenses increase $ 20,000

4. Variable expenses increase by 60 cents per unit, the selling price increases by 15%, and the number of units sold decreases by 15%.
Selling price increase 15%
Number of units sold decrease 15%
Variable expense per unit increase $ 0.60

(a)
Kelly Company
Contribution Format Income Statements
Part 1 Part 2 Part 3 Part 4
Per Unit Per Unit Per Unit Per Unit
Sales $ 780,000 $ 10.00 $ 648,000 $ 9.00 $ 594,000 $ 11.00 $ 586,500 $ 11.50
Variable expenses 468,000 6.00 432000 6.00 324,000 6.00 336,600 6.60
Contribution Margin 312,000 $ 4.00 216,000 $ 3.00 270,000 $ 5.00 249,900 $ 4.90
Fixed Expenses 100,000 100,000 120,000 100,000 Correct
Operating Income $ 212,000 $ 116,000 $ 150,000 $ 149,900
Correct Correct Correct Correct

(b)
INCREMENTAL Approach
Expected Total Contribution Margin $ 312,000 Correct $ 216,000 Correct $ 270,000 Correct $ 249,900 Correct
Present Total Contribution Margin 240,000 Correct 240,000 Correct 240,000 Correct 240,000 Correct
Increase (decrease) in Total Contribution Margin 72,000 Correct (24,000) Correct 30,000 Correct 9,900 Correct
Incremental Fixed Expenses - Correct - Correct 20,000 Correct - Correct
Increase (decrease) in Operating Income $ 72,000 Correct $ (24,000) Correct $ 10,000 Correct $ 9,900 Correct
 Case #1 Case #2 Case #3 Case #4
Total Per unit Total Per unit Total Per unit Total Per unit
Number of units sold 9,000 14,000 Correct 20,000 5,000

Sales $ 270,000 $ 30 $ 350,000 $ 25 $ 400,000 Correct $ 20 $ 160,000

Variable expenses 162,000 18 140,000 Correct 10 280,000 14 90,000 Correct
Contribution margin 108,000 Correct $ 12 Correct 210,000 Correct $ 15 120,000 Correct $ 6 70,000 Correct $ 14
Fixed expenses 90,000 10 170,000 85,000 82,000
Operating income (loss) $ 18,000 Correct $ 40,000 $ 35,000 $ (12,000)

b. Assume that more than one product is being sold in each of the following four case situations:
Case #1 Case #2 Case #3 Case #4
Units Sold 15000 % Units Sold 8000 % Units Sold % %
Sales $ 450,000 $ 200,000 $ 700,000 Correct 100% $ 300,000
Variable expenses 270,000 Correct 130,000 140,000 Correct 20% 90,000
Contribution margin 180,000 Correct 40% 70,000 Correct 35% Correct 560,000 Correct 80% 210,000 Correct 70%
Fixed expenses 115,000 Correct 60,000 470,000 225,000 Correct
Operating income $ 65,000 $ 10,000 Correct $ 90,000 $ (15,000)
Exercise 4-5
Mackson Products distributes a single product, a woven basket; its selling price is $8 and its variable cost is $6 per unit. The company’s monthly fixed expense is $5,500.

Selling price $ 8.00

Variable expenses per unit $ 6.00
Contr. $ 2.00 25%
Fixed Expenses monthly $ 5,500 $ 1,375

Required:
1. Solve for the company’s break-even point in unit sales
Breakeven Point in Unit Sales Fixed Expenses
=
Unit CM

= 2,750 Correct

2. Solve for the company’s break-even point in sales dollars.

Breakeven Point in Sales Dollars Fixed Expenses
=
CM Ratio

= $ 22,000 Correct
Exercise 4-6 Required:
Ng Corporation produces and sells only one product; its selling 1. Solve for the unit sales that are required to earn a target profit before taxes of $3,000.
price is $100 and its variable cost is $80 per unit. The company’s
monthly fixed expense is $20,000. Unit Sales for Target Profit of $ 3,000 Fixed Expenses + Target Profit
=
Selling price $ 100.00 Unit CM
Variable expenses per unit $ 80.00
$ 20.00 20% = 1,150 Correct
Fixed Expenses monthly $ 20,000

Part 1
Target Profit before tax $ 3,000
Part 2 2. Solve for the dollar sales that are required to earn a target profit before taxes of $4,000.
Target Profit before tax $ 4,000
Part 3 Sales $s for Target Profit of $ 4,000 Fixed Expenses + Target Profit
=
Corporate income tax rate 25% CM Ratio
After tax Target Profit $ 6,000
= $ 120,000 Correct

3. Calculate the number of units that need to be sold to earn an after-tax income of $6,000, assuming a tax rate of 25%.

Unit Sales for Target "After- Tax" Profit of $ 6,000 = Fixed Expenses + Target Profit
Unit CM

= 1,400 Correct
Exercise 4-14 Required:
Memtech Company is the exclusive distributor of a high-speed computer memory 1. What are the variable expenses per unit? $ 35.00 Correct
chip. The product sells for $50 per unit and has a CM ratio of 30%. The company’s
fixed expenses are $240,000 per year. 2(a) What is the break-even point in units and in sales dollars?
Breakeven Point in Unit Sales = 16,000 Correct
Selling price $ 50.00 $ 50.00
var $ 35.00 $ 30.00 Breakeven Point in Sales Dollars = $ 800,000 Correct
Contribution Margin $ 15.00 30% $ 20.00 40%
Fixed Expenses per year $ 240,000 $ 240,000 2 (b) What sales level in units and in sales dollars is required to earn an operating
income of $75,000?
Part 2 (b)
Target Profit before tax $ 75,000 Unit Sales for Target Profit of $ 75,000 = 21,000 Correct
Part 2 (c) in Variable
Reduction
Expenses per unit $ 5.00 Sales $ for Target Profit of $ 75,000 = 1,050,000 Correct
Part 3
Corporate income tax rate 20% 2 (c) Assume that through negotiation with the manufacturer, Memtech Company is
After tax Target Profit $ 75,000 able to reduce its variable expenses by $5 per unit. What is the company’s new
break-even point in units and in sales dollars?

Breakeven Point in Unit Sales = 12,000 Correct

Breakeven Point in Sales Dollars = $ 600,000 Correct

3. Referring to the original data, what sales level in dollars is required to earn an
annual profit of $75,000 after taxes if the company’s tax rate is 20%?

Sales for Target "After- Tax" Profit of $75,000 = $ 1,112,500 Correct

0
Problem 4-19 Required:
Stratford Company distributes a lightweight lawn chair that sells for $15 per unit. 1. Calculate the company’s CM ratio and its break-even point in sales dollars and in units.
Variable expenses are $6 per unit, and fixed expenses total $180,000 annually.
Results for last year are as follows: Company's Contribution Margin Ratio 60% Correct
Sales units 24,000
Stratford Company Optional area for Breakeven Point in Sales Dollars = $ 300,000 Correct
calculations
Income Statement
Sales $ 360,000 $ 15 $ 3,000 Breakeven Point in Unit Sales = 20,000 Correct
Variable expenses 144,000 $ 6
Contribution Margin 216,000 $ 9 $ 27,000 2. If sales increase by $45,000 during the coming year due to increased demand, by how much should
Fixed Expenses 180,000 operating income increase? Use the incremental approach in preparing your answer.
Operating income (loss) $ 36,000

Part 2
Sales increase $ 45,000 Increase in Operating Income $ 27,000 Correct

Part 3 3. Refer to the original data. The sales vice-president is convinced that a 10% decrease in the selling
Decrease in selling price 10% price, combined with a $100,000 increase in marketing expenditures, would increase annual unit sales
Increase Advertising $ 100,000 by 75%. Prepare a new contribution format income statement assuming these changes occur. Should
Increase sales units 75% the company proceed with the changes?

Sales Correct $ 567,000 Correct

Part 4 Variable expenses Correct 252,000 Correct
Increase sales commissions $ 2 per unit Contribution Margin Correct 315,000 Correct
Increased sales units to 48,000 Fixed Expenses Correct 280,000 Correct
Operating income (loss) $ 35,000 Correct

Should the company proceed with the changes? No Correct

720000
$ 288,000 4. Refer to the original data. The president feels that it would be unwise to change the selling price.
96000 Instead, she wants to increase the sales commission by $2 per unit. She thinks that this move,
$ 336,000 combined with some increase in advertising, would increase sales to 48,000 units compared to 24,000
-180000 last year. By how much could advertising be increased with profits remaining unchanged? Do not
prepare an income statement; use the incremental analysis approach.

Amount marketing can be increased with net

$ 120,000
operating income remaining unchanged Correct

Yes
No
Maybe
Don't know

Accounts Payable
Accounts Receivable
Contribution Margin
Cost of Good Sold
Fixed Expenses
Gross Margin
Operating income (loss)
Sales
Variable expenses
D8: Optional area for calculations
K28: choose the correct answer from the drop down list provided
Exercise 4-7 Required:
Mohan Corporation is a distributor of a sun umbrella used at resort 1. Compute the company’s margin of safety.
hotels. Data concerning the next month ’s budget appear below:
Margin of Safety = Expected Sales - Breakeven Sales
Selling price $ 25.00 = $ 3,750 Correct
Variable expenses per unit $ 15.00
Cont Mar $ 10.00 40% 2. Compute the company’s margin of safety as a percentage of its sales.
Fixed Expenses monthly $ 8,500 Margin of Safety % = Margin of Safety
Expected Sales
Unit sales 1,000
= 15% Correct
Exercise 4-8
Entergo Company installs home theatre systems. The company’s most recent monthly contribution format income statement appears below:

%
Sales $ 120,000 100%
Variable expenses 84,000 70%
Contribution Margin 36,000 30%
Fixed Expenses 24,000
Operating Income $ 12,000

Required:
1. Compute the company’s degree of operating leverage.
Degree of operating leverage (Contribution Margin/Operating Income) 3 Correct

2. Using the degree of operating leverage, estimate the impact on operating income of a 10% increase in sales.

Increase in sales 10%

$ Impact on Operating income from 10% increase in sales $ 3,600 Correct

3. Verify your estimate from (2) above by constructing a new contribution format income statement for the company, assuming a 10% increase in sales.

Sales $ 132,000
Variable expenses 92,400
Contribution Margin 39,600
Fixed Expenses 24,000 Correct
Operating Income $ 15,600 Correct

Increase in operating income $ 3,600 Correct

Exercise 4-9:
Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The
company charges customers $15 per hour for each type of service, but lawn maintenance has higher variable costs ($7 per hour) than
garden maintenance ($3 per hour) because of fuel expenses incurred to operate lawn-mowing equipment. All employees are paid a fixed
monthly salary. A contribution format income statement for a recent month for the two services appears below. During the month, 6,000
hours of lawn maintenance services and 2,000 hours of garden maintenance were provided:

Lawn Per Garden Per

Maintenance Hour Maintenance Hour Total
Sales $ 90,000 $ 15 $ 30,000 $ 15 $ 120,000
Variable expenses 42,000 7 6,000 3 48,000
Contribution Margin $ 48,000 $ 8 $ 24,000 $ 12 72,000 $ 5.33 $ 4 $ 9.33
Fixed Expenses 54,000
Operating Income $ 18,000

Hours of services provided during the month 6,000 2,000 8,000

Required:
1. Compute the overall CM ratio for the company. 60% Correct

2. Compute the overall break-even point for the company in sales dollars. $ 90,000 Correct

3. Compute the weighted-average CM per hour for the company. $ 9.00 Correct

4. Calculate the overall break-even point for the company in hours. 6,000 Correct

5. At the overall break-even point in total hours, how many hours of each service must be provided for the company to break even?

Lawn Maintenance
Garden Maintenance

6. Calculate the overall sales in dollars required to earn an after-tax profit of $42,000 if the tax rate is 30%. $ 190,000 Correct

After-tax profit $ 42,000 $ 60,000

Tax rate 30%
Problem 4-20
Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products—sinks, mirrors, and vanities. Budgeted sales by
product and in total for the coming month are shown below based on planned unit sales as follows:

Smithen Company
Budget for the month ending XXXXXX
Sinks Mirrors Vanities Total
Sales Units 1,000 500 500 2,000
Sales Mix 50% 25% 25% 100%

Sales $ 240,000 100% $ 100,000 100% $ 160,000 100% $ 500,000 100%

Variable expenses 72,000 30% 80,000 80% 88,000 55% 240,000 48%
Contribution Margin $ 168,000 70% $ 20,000 20% $ 72,000 45% 260,000 52%
Contribution Margin per unit $ 168 $ 40 $ 144
Fixed Expenses 223,600
Operating Income $ 36,400

Breakeven point in Sales Dollars $ 430,000

Weighted Average CM per unit $ 130.00

Breakeven point in unit Sales 1,720

As shown by these data, operating income is budgeted at $36,400 for the month, break-even sales dollars at $430,000, and break-even unit sales at 1,720. Assume that
actual sales for the month total $504,000 (2,100 units), with the CM ratio and per unit amounts the same as budgeted. Actual fixed expenses are the same as budgeted,
$223,600. Actual sales by product are as follows: sinks, $126,000 (525 units); mirrors, $210,000 (1,050 units); and vanities, $168,000 (525 units).
Sinks Mirrors Vanities Total
Actual Sales $ 126,000 $ 210,000 $ 168,000 $ 504,000
Actual Sales units 525 1,050 525 2,100
Actual CM per unit $ 168.00 $ 40.00 $ 144.00
$ 126,000.00

$ 88,200.00
Required:
1. Prepare a contribution format income statement for the month based on actual sales data. Present the income statement in the format shown above.
Sinks Mirrors Vanities Total
Sales Units 525 1,050 525 2,100
Sales Mix

Sales $ 126,000 $ 210,000 $ 168,000 $ 504,000

Variable expenses 37,800 168,000 92,400 298,200
Contribution Margin $ 88,200 $ 42,000 $ 75,600 205,800 41% 98
Fixed Expenses Correct Correct Correct 223,600 Correct
Operating Income (loss) $ (17,800)
Correct

2. Compute the break-even point in sales dollars for the month, based on the actual data. $ 547,592
Correct

3. Calculate the break-even point in unit sales for the month, based on the actual data. 2,282
Correct

4. Considering the fact that the company exceeded its $500,000 sales budget for the month, the president is shocked at the results shown on your income statement in (1)
above. Prepare a brief memo for the president explaining why both the operating results and the break-even point in sales dollars are different from what was budgeted.
Problem 4-21 Required:
The Tops national chain of shirt stores carry many styles of shirts that are all sold at the same Tops is a fairly new company. The company has asked you, as a member of its planning group,
price. To encourage sales personnel to step up their sales efforts, the company pays a to assist in some basic analysis of its stores and company policies.
generous sales commission on each shirt sold. Sales personnel also receive a small basic salary.
1. Calculate the annual break-even point in dollar sales and in unit sales for the Bradbury store.
The following table contains cost and revenue data for the Bradbury store. These data are
typical of the company’s many outlets:
Selling price $ 40.00 Breakeven Point in Sales = $ 800,000 Correct
Variable expenses
Invoice cost $ 18.00 Breakeven Point in Unit Sales = 20,000 Correct
Sales Commission 7.00
$ 25.00 2. If 19,000 shirts are sold in a year, what will be the Bradbury store’s operating income or loss?
Contribution Margin $ 15.00 37.50% 30.00%
Fixed Expenses (annually)
Advertising $ 80,000
Rent 150,000 Operating income (loss) $ (15,000) Correct
Salaries 70,000 40
$ 300,000 18 3. The company is considering paying the Bradbury store manager an incentive commission of $3
3 per shirt (in addition to the salesperson’s commissions). If this change is made, what will be the new
Part 2 19 break-even point in dollar sales and in unit sales?
Shirts sold 19,000 446500
-300000 Breakeven Point in Sales = $ 1,000,000 Correct
Part 3 146,500.00
Breakeven Point in Unit Sales = 25,000 Correct
Manager commission $ 3.00
Part 4 4. Refer to the original data. As an alternative to (4) above, the company is considering paying the
Manager commission on unit sales above the store manager a $3 commission on each shirt sold in excess of the break-even point. If this change is
breakeven point $ 3.00 made, what will be the store’s operating income or loss if 23,500 shirts
Shirts sold 23,500 are sold in a year?

Part 5
Increased fixed salaries $ 107,000
Reduction in Commissions $ 7.00

Operating income (loss) $ 14,000 Not yet correct

5. Refer to the original data. The company is considering eliminating sales commissions entirely in its
stores and increasing fixed salaries by $107,000 annually.
a. If this change is made, what will be the new break-even point in dollar sales and in unit sales in
the Bradbury store?

Breakeven Point in Sales =

Breakeven Point in Unit Sales =

b . Would you recommend that the change be made? Explain.

Problem 4-24:
The Marbury Stein Shop sells steins from all parts of the world. The owner of the shop, Clint Marbury, is thinking of expanding his
operations by hiring local college and university students, on a commission basis, to sell steins at the local post-secondary
schools. The steins will bear the school emblem.

These steins must be ordered from the manufacturer three months in advance, and because of the unique emblem of each
school, they cannot be returned. The steins would cost Marbury $15 each, with a minimum order of 200 steins. Any additional
steins would have to be ordered in increments of 50.

Since Marbury’s plan would not require any additional facilities, the only costs associated with the project would be the cost of
the steins and the cost of sales commissions. The selling price of the steins would be $30 each. Marbury would pay the students
a commission of $6 for each stein sold.

Selling price $ 30.00

Purchase cost per stein $ 15.00
Commission to students $ 6.00
Contribution Margin $ 9.00 0.3 30
Fixed Expenses 15
Minimum order 200 $ 6
Additional steins minimum $ 9 $ 800
incremental order quantity 50

1. To make the project worth his time, Marbury requires a $7,200 operating income for the first six months of the venture. What
level of sales in units and dollars is required to attain this target operating income? Show all computations.
Target Profit before tax $ 7,200

Unit Sales for Target Profit of $ 7,200 800 Correct

Sales $ for Target Profit of $ 7,200 $ 24,000 Correct

2. What level of sales dollars is required to generate $12,000 in after-tax operating income if the tax rate is 20%?
After-tax operating income $ 12,000
Tax rate 20% 15000

Sales $ for Target After-Tax Profit of $ 6,000 $ 50,000 Correct

3. Assume that the venture is undertaken and an order is placed for 200 steins. What is Marbury’s break-even point in units and
in sales dollars? Show all computations, and explain the reasoning behind your answer.
Quantity of steins ordered 200

Breakeven point in unit sales 9 Not yet correct

Breakeven point in sales