Question:
(CVP; taxes) Golf Glider makes gasoline-powered golf carts. The selling price is $5,000 each, and costs are as follows:
|
Cost
|
Per Unit
|
Total
|
|
Direct material
|
$2,000
|
|
|
Direct labor
|
625
|
|
|
Variable overhead
|
325
|
|
|
Variable selling
|
50
|
|
|
Annual fixed production overhead
|
|
$250,000
|
|
Annual fixed selling and administrative
|
|
120,000
|
Golf Glider's income is taxed at a 40 percent rate.
a. How many golf carts must Golf Glider sell to earn $600,000 after tax?
b. What level of revenue is needed to yield an after-tax income equal to 20 percent of sales?