(CVP; taxes) Golf Glider makes gasoline powered golf carts. The selling price is $5,000 each, and costs are as follows:
|
Cost |
Per Unit |
Total |
|
Direct material |
$2,000 |
|
|
Direct labor |
625 |
|
|
Variable overhead |
325 |
|
|
Variable selling |
50 |
|
|
Annual fixed production overhead |
|
$250,000 |
|
Annual fixed selling and administrative |
|
120,000 |
Golf Glider’s income is taxed at a 40 percent rate.
a. How many golf carts must Golf Glider sell to earn $600,000 after tax?
b. What level of revenue is needed to yield an after tax income equal to 20 percent of sales?