Question: Jaques Systems Engineering provides consulting services to city water authorities. A recent income statement revealed variable costs of dollar 740.000 on a sales level of $1,000,000. Yearly fixed costs are $200,000, & the company's income tax rate is 35%.
Required
[A] Compute the firm's break-even volume of service revenue.
[B] Find how much before-tax income must the firm earn to make an after-tax net income of dollar 100,000?
[C] Find, what level of revenue must the firm create to earn an after-tax net income of dollar 100,000?
[D] Assume the company's income tax rate rises to 40%. What will happen to the breakeven level of consulting revenue?