Question: Question 4 (14 marks) Power Grid Engineering Associates & Co. provides consulting services to commercial electric utilities. The consulting firm's unit contribution margin ratio is

Question 4 (14 marks) Power Grid Engineering Associates & Co. provides

Question 4 (14 marks) Power Grid Engineering Associates & Co. provides consulting services to commercial electric utilities. The consulting firm's unit contribution margin ratio is 0.40, and its monthly fixed expenses are $15 000. The firm's income tax rate is 30 per cent. Required: (a) Calculate the firm's yearly break-even service revenue; (6 marks) (b) What level of consulting service revenue must the firm yearly generate to earn an after-tax net profit of $160 000? (6 marks) (c) Based on (b), what would be the margin of safety in dollars? (2 mark)

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