The Claire Corporation sells only one product. The following is budgeted information for that product: Annual production and sales capacity (units) 90,000 Budgeted selling price $225 per unit Variable cost of goods sold $70 per unit Fixed manufacturing costs $1,500,000 Variable selling and administrative costs $20 per unit Fixed selling and administrative costs $1,200,000 Claire’s corporate tax rate is 40%.
a) How many units does Samantha need to sell to breakeven?
b) How much revenue does Samantha need to generate to breakeven?
c) How many units does Samantha need to sell to earn an operating profit (before taxes) of $540,000?
d) How much revenue does Samantha need to generate to earn net income (after taxes) of $810,000?
e) Assume Samantha is currently producing and selling 40,000 units. By what percentage will operating income change if sales increase by 7% from 40,000 units?
f) Assume Samantha is currently producing and selling 40,000 units. By what percentage will operating income change if sales decrease by 4% from 40,000 units?