Question

Madden Company projected its income before taxes for next year as shown here. Madden is subject to a 40% income tax rate.
Sales (160,000 units) ....... $8,000,000
Cost of sales
Variable costs ......... 2,000,000
Fixed costs .......... $3,000,000
Pretax profit ........... $3,000,000

REQUIRED
A. What is Madden’s breakeven point in units sold for the next year?
B. If Madden wants $4.5 million in pretax profit, what is the required level of sales in dollars?
C. If Madden’s net assets are $36 million, what amount of revenue must be achieved for
Madden to earn a 10% after-tax return on assets?



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  • CreatedJanuary 26, 2015
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