Break-Even Calculation; Return on Assets, Income Taxes Madden Company has projected its income before taxes for next year as shown below. Madden is subject to a 40 percent income tax rate.

REQUIRED:

a. Compute Madden’s break-even point in units sold for the next year.

b. If Madden wants $4,500,000 of income before taxes, compute the required sales in dollars.

c. Madden’s net assets are $36,000,000. Compute the dollar sales that must be achieved for Madden to earn a 10 percent after-tax return on assets. (CMA adapted)
 

Transcribed Image Text:

Sales (160,000 units) $8,000,000 Cost of sales Variable costs $2,000,000 3,000,000 Fixed costs Total costs 5,000,000 $3,000,000 Income before taxes Sales (160,000 units) $8,000,000 Cost of sales Variable costs $2,000,000 3,000,000 Fixed costs Total costs 5,000,000 $3,000,000 Income before taxes

Answer rating: 100% (QA)

c Madden want to earn after tax return of 10 of net assets Return on net assets Net Income Total ass... View the full answer