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# Volume sales and before tax profit

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QUESTION 2

BOOM, Inc., manufactures and sells dynamite. A projected income statement for the expected sales volume of 1,500,000 cases is as follows:

Sales \$4,500,000
Variable expenses 1,000,000
Contribution margin \$3,500,000
Fixed expenses 2,000,000
Before-tax profit \$1,500,000

How many cases would need to be sold to have a before-tax profit of \$2,150,000?

a. 1,100,000 cases d. 1,778,572 cases
b. 1,305,523 cases e. 1,933,842 cases
c. 1,589,331 cases f. none of the above

What dollar sales volume would be required to achieve \$4,000,000 of before-tax profit?

a. \$6,845,100 b. \$7,714,287 c. \$9,354,006 d. \$10,522,992

#### Solution Preview

The first thing you need to do is take the before tax profit and add fixed expenses since fixed expenses don't change regardless of amount of units sold.
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<br>So now we have 4,150,000 contribution margin for the first question (2,150,000 before tax profit plus the fixed expenses of 2,000,000)
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<br>We also know that in the projected problem there are 1,500,000 cases and the sales are ...

\$2.49