The XYZ Company provides you with the following data regarding operations in 20x9.
	($)
Sales Commission	13,000
Direct material	35,000
Depreciation on office facilities	12,000
Factory supervisory salaries (indirect)	15,000
Sales	120,000
Variable manufacturing overhead (indirect)	5,000
Direct labor	25,000

1. Construct the Decision Model of Income Statement by Absorption Approach.

2. Construct the Decision Model of Income Statement by Contribution Approach.

3. Compute BEP in Sales ($) using the decision model you construct.

4. Compute Target Sales for Target Profit After Tax

XYX company sets up the Target Profit After Tax for $20,000 with an income tax rate of 40%.

How many Sales should the company make to meet the Target Profit AFTER-tax?

5. Why is the contribution approach better off calculating Sales in BEP than the absorption approach?

Answer rating: 100% (QA)

1The Decision Model of Income Statement by Absorption Approach Sales 120000 Less Direct material 350... View the full answer