Extensions of the CVP Model—Taxes
Odd Wallow Drinks is considering adding a new line of fruit juices to its merchandise products. This line of juices has the following prices and costs:
Selling price per case (24 bottles) of juice |
$ 50 |
Variable cost per case (24 bottles) of juice |
$ 24 |
Fixed costs per year associated with |
|
this product |
$8,112,000 |
Income tax rate |
40% |
Required
a. Compute Odd Wallow Drinks’s break even point in units per year.
b. How many cases must Odd Wallow Drinks sell to earn $1,872,000 per year after taxes on the juice?