Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

Exercise 14

CVP: Before- and After-Tax Targeted Income
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $80.50 per helmet, and fixed costs are $1,255,800. The tax rate is 25 percent. Last year, 14,000 helmets were sold.
Required:
1. What is Head-Gear's net income for last year?
2. What is Head-Gear's break-even revenue? (Round to the nearest dollar.)
3. Suppose Head-Gear wants to earn before-tax operating income of $900,000. How many units must be sold? (Round to the nearest unit.)
4. Suppose Head-Gear wants to earn after-tax net income of $650,000. How many units must be sold? (Round to the nearest unit.)
5. Suppose the income tax rate rises to 35 percent. How many units must be sold for HeadGear to earn after-tax income of $650,000? (Round to the nearest unit.)