Question: Need help with D) & E) please! Multiple Product Planning with Taxes In the year 2008, Wiggins Processing Company had the following contribution income statement:
Need help with D) & E) please!
Multiple Product Planning with Taxes In the year 2008, Wiggins Processing Company had the following contribution income statement:
| WIGGINS PROCESSING COMPANY Contribution Income Statement For the Year 2008 | ||
|---|---|---|
| Sales | $1,000,000 | |
| Variable costs | ||
| Cost of goods sold | $440,000 | |
| Selling and administrative | 200,000 | (640,000) |
| Contribution margin | 360,000 | |
| Fixed Costs | ||
| Factory overhead | 190,000 | |
| Selling and administrative | 80,000 | (270,000) |
| Before-tax profit | 90,000 | |
| Income taxes (39%) | (35,100) | |
| After-tax profit | $54,900 | |
HINT: Round the contribution margin ratio to two decimal places for your calculations below.
(a) Determine the annual break-even point in sales dollars. 750,000
(b) Determine the annual margin of safety in sales dollars. 250,000
(c) What is the break-even point in sales dollars if management makes a decision that increases fixed costs by $36,000? 850,000
(d) With the current cost structure, including fixed costs of $270,000, what dollar sales volume is required to provide an after-tax net income of $150,000?
Do not round until your final answer. Round your answer up to the nearest dollar. $Answer
(e) Prepare an abbreviated contribution income statement to verify that the solution to part (d) will provide the desired after-tax income.
Round your answers to the nearest dollar. Use rounded answers for subsequent calculations. Do not use negative signs with any of your answers.
| WIGGINS PROCESSING COMPANY Income Statement For the Year 2008 | ||
|---|---|---|
| Sales | Answer
| |
| Variable costs | Answer
| |
| Contribution margin | Answer
| |
| Fixed costs | 270,000
| |
| Net income before taxes | Answer
| |
| Income taxes (39%) | Answer
| |
| Net income after taxes | 150,000
| |
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