Power Grid Engineering Associates, Inc., provides consulting services to commercial electric utilities. The consulting firm's contribution-margin ratio is 30 percent, and its annual fixed expenses are $240,000. The firm's income-tax rate is 45 percent.
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Calculate the firm's break-even volume of service revenue.
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How much before-tax income must the firm earn to make an after-tax net income of $136,000? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
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What level of revenue for consulting services must the firm generate to earn an after-tax net income of $136,000? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
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Suppose the firm's income-tax rate declines to 35 percent. What will happen to the break-even level of consulting service revenue?
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The break-even level of consulting service revenue will not change. |
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The break-even level of consulting service revenue will increase. |
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The break-even level of consulting service revenue will decrease. |
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