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Multiple Product Planning with Taxes




Question;Multiple Product Planning with Taxes;In the year 2008, Wiggins Processing Company had the following contribution;income statement;WIGGINS;PROCESSING COMPANY;Contribution Income Statement;For the Year 2008;Sales;$1,000,000;Variable costs;Cost of goods sold;$440,000;Selling and administrative;200,000;(640,000);Contribution margin;360,000;Fixed Costs;Factory overhead;154,000;Selling and administrative;80,000;(234,000);Before-tax profit;126,000;Income taxes (39%);(49,140);After-tax profit;$76,860;(a) Determine the annual break-even point in sales dollars.;$Answer;Correct;(b) Determine the annual margin of safety in sales dollars.;$Answer;Correct;(c) What is the break-even point in sales dollars if management makes a;decision that increases fixed costs by $72,000?;Answer;Correct;(d) With the current cost structure, including fixed costs of $234,000, what;dollar sales volume is required to provide an after-tax net income of $270,000?;(Round your answer to the nearest dollar.);$Answer;Incorrect;(e) Prepare an abbreviated contribution income statement to verify that the;solution to part (d) will provide the desired after-tax income.;WIGGINS;PROCESSING COMPANY;Income Statement;For the Year 2008;Sales;$Answer;Incorrect;Variable costs (64% of sales);Answer;Incorrect;Contribution margin (36% of sales);Answer;Incorrect;Fixed costs;Answer;Incorrect;Net income before taxes;Answer;Incorrect;Income taxes (39%);Answer;Incorrect;Net income after taxes;$Answer


Paper#41031 | Written in 18-Jul-2015

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