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    Computation of Break Even Point

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    4. L.F Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the break-even point in dollars.

    5. L.F Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Dunkin company management targets an annual after-tax income of $843,750. The company is subject to a 25% income tax rate. Compute the unit sales to earn the target after-tax net income.

    6. LFCompany manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Dunkin company management targets an annual after-tax income of $843,750. The company is subject to a 25% income tax rate. Compute the dollar sales to earn the target after-tax net income.

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    Solution Summary

    The solution is provided in three parts as follows.

    1. Computation of the break-even point in dollars.

    2. 5 Computation of the unit sales to earn the target after-tax net income and Verification of Answer:

    3. Sales Dollars required to earn After Tax Net income of 843750 or before tax net income of 1125000=

    $2.19