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Home Insert Draw Page Layout Formulas Data Review View Help Search ALT-BE-TAX Choose Exercise (1-5)...

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Accounting

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Home Insert Draw Page Layout Formulas Data Review View Help Search ALT-BE-TAX Choose Exercise (1-5) Delmar has a product that sells for a price of $40. The variable cost per unit is $24 and fixed costs are $145,000 for the year. Delmar's income tax rate is 20%. How many units must Delmar sell in order to earn an after-tax income of $100,000? Start with the CVP info: PRICE VC PER UNIT CM/UNIT FIXED COSTS STEP 1: Using the Earnings After Tax and the tax rate to calculate Earnings Before Tax. EBT = EAT divided by (1-TaxRate) What is the Earnings Before Tax? EBT = STEP 2: Compute Units Necessary to Earn the EBT Above: Units to Sell = (Fixed Cost + EBT)/CM Per Unit Units Required = STEP 3: Prove your answer by creating a CVP Income Statement, using the Units Required figure from above. Sales Revenue Total Variable Costs Contribution Margin Fixed Costs Earnings Before Taxes Income Tax (20%) Earnings After Taxes

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