XYZ Inc is a one-product firm and sells high-quality widgets. Widgets are sold for $10 each. Variable
Question:
XYZ Inc is a one-product firm and sells high-quality widgets. Widgets are sold for $10 each. Variable cost per widget is equal to $2 per unit. Total fixed cost is $1000 per month. Corporate income tax rate is 35%.
Required:
1) Compute the contribution margin per unit.
2)Compute the contribution margin ratio.
3) Find the break-even point in number of widgets to be sold per year.
4) Compute annual break-even revenue.
5) Compute annual expenses at the break-even point.
6) Compute profit before taxes and profit after taxes at the break-even point per year
7) If the firm requires a profit after taxes of $25 000per year, compute the required number of widgets to be sold per year.
8) Provide a break-even chart.
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura