Question: Problem 3-78 (Static) Extensions of the CVP Model-Multiple Products and Taxes (LO 3-2, 4) Elliott Trophies makes three types of awards for organizations to give

 Problem 3-78 (Static) Extensions of the CVP Model-Multiple Products and Taxes

Problem 3-78 (Static) Extensions of the CVP Model-Multiple Products and Taxes (LO 3-2, 4) Elliott Trophies makes three types of awards for organizations to give employees or team members. The following are its prices and costs: Fixed costs of $432,000 per year include building and equipment costs, marketing costs, and the costs of administration. Elliott Trophies is subject to a 21 percent tax rate on income. Required: a. Given this information, how much will Elliott Trophies earn each year after taxes? b. Assuming the given sales mix is the same at the break-even point, at what sales revenue does Elliott Trophies break even? c. Assuming the given sales mix, at what sales revenue will the company earn $276,500 per year after taxes? d. Elliott Trophies is concerned about the future of the Celebrity trophy market, given recent cost-cutting by companies and is considering becoming more specialized in the Sport and Employee market. If Elliott Trophies drops the Celebrity model, fixed costs will fall to $402,000 per year. If it follows through with this plan, Elliott Trophies expects that the relative sales mix between the Sport and Employee models will remain the same. That is, for every 36,000 units of the Sport model sold, Elliott Trophies would expect to sell 9,000 units of the Employee model. How many units of the Sport and Employee models would Elliott Trophies have to sell to achieve the same after-tax income it currently earns with the three models? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Given this information, how much will Elliott Trophies earn each year after taxes

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!