CVP with Income Taxes
Crest Industries sells a single model of satellite radio receivers for use in the home. The radios have the following price and cost characteristics:
|
Sales price |
$ 80 per radio |
|
Variable costs |
$ 32 per radio |
|
Fixed costs |
$360,000 per month |
Crest is subject to an income tax rate of 40 percent.
Required
a. How many receivers must Crest sell every month to break even?
b. How many receivers must Crest sell to earn a monthly operating profit t of $90,000 after taxes?