Assume the following cost information for Melissa Company: $\begin{array}{ll}
\text { Selling price per unit } & \$ 144 \
\text { Variable cost p per unit } & \$ 80 \
\text { Total fixed costs } & \$ 80,000 \
\text { Tax rate } & 40 \%
\end{array}$ of sales dollars is required to earn an after- tax net income of $24,000.
A) $252,000
B) $216,000
C) $270,000
D) $315,000

Question

Quizplus · Accepted Answer

To find the required sales dollars, first calculate the pre-tax income needed: $24,000 / (1 - 0.40) = $40,000. Then, use the contribution margin per unit ($144 - $80 = $64) to find the number of units needed: $40,000 + $80,000 (fixed costs) = $120,000 / $64 = 1,875 units. Finally, calculate the sales dollars: 1,875 units * $144 = $270,000.

Assume the Following Cost Information for Melissa Company Of Sales Dollars Is Required to Earn an After- Tax