(CVP; taxes) Sheridan Shacks makes portable garden sheds that sell for $1,800 each. Costs are as follows:
|
Per Unit |
Total |
|
|
Direct material |
$800 |
|
|
Direct labor |
90 |
|
|
Variable production overhead |
60 |
|
|
Variable selling and administrative cost |
50 |
|
|
Fixed production overhead |
|
$200,000 |
|
Fixed selling and administrative |
|
60,000 |
Assume a tax rate for the company of 35 percent.
a. If Sheridan Shacks wants to earn an after tax profit of $182,000, how many garden sheds must it sell?
b. How much revenue is needed to yield an after tax profit of 8 percent of revenue? How many garden sheds does this revenue amount represent?