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# A company whose fixed costs of \$360,000 can elaborate: CVP

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A company whose fixed costs are \$ 360,000 can elaborate a maximum figure of 12,000 units during the year. For each product sold can make a profit per unit of \$ 48. The variable cost incurred in the preparation for each unit is \$ 12. The company is interested in getting answers to these questions

1- What is the total income should be the company to recover the fixed cost and variable cost?

2- What is the number of units to sell to recover its costs totals?

3- In case the company decides Use up the total plant capacity which would be the profit that it could get:
a)Before Tax Payment
b)After tax payment (tax rate 25%)

4- What will be the total income that will allow the company to recover the cost totals and get the expected gain?

5- If the company plans to make a profit of \$ 60.000 say how many units must be sold for profit planned?

6- What would be the total income that will allow the company to recover costs and get the above totals gain?

7- What is the total income that the company should have to cover fixed costs, variable, expected profit and paying taxes?

8- Use the following summary table and demonstrate whether the total of income earned in \$60,000 are sufficient to recover costs, and get tax gain of \$ 60,000 planned:
a.Total Variable Cost \$
b.Total Fixed Cost \$
c.Net Income before tax \$.

#### Solution Preview

Your tutorial is in Excel, attached. There are schedules to show units and ...

#### Solution Summary

Your tutorial is in Excel, attached. There are schedules to show units and sales to breakeven, units and sales to reach before and after target profit and income statements as a "proof" of the solutions provided. The conversion of after tax profit into before tax needed to achieve the after tax target is included.

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