The following data are for the Biro Liu Company, a manufacturer of ballpoint pens: Income tax rate

Question:

The following data are for the Biro Liu Company, a manufacturer of ballpoint pens:

Income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . 50%
Selling price per unit . . . . . . . . . . . . . .. . . . . . . $2.75
Variable cost per unit . . . . . . . . . . . . . . . . . . . . $2.20
Total fixed costs . . . . . . . . . . . . . . . . . .. . . . $115,000

Required:

1. How many units must Biro Liu Company sell to earn an after-tax income of $25,000?

2. If total fixed costs doubled and contribution margin per unit also doubled, what would happen to the break-even point?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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