The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for £4.00 each. Variable and fixed costs are as follows: Valdez Mug produced and sold 10,000 cups during April 2011. There were no beginning or ending inventories.
Required:
a.
Determine Valdez Mug's monthly break-even point in units.
b.
If monthly sales increase by 500 cups, what will be the change in monthly profits?
c.
If Valdez Mug is now subject to an income tax of 40 per cent, what pound sales volume is required to earn a monthly after-tax net income of £12,000?

Question

The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for £4.00 each. Variable and fixed costs are as follows:  Valdez Mug produced and sold 10,000 cups during April 2011. There were no beginning or ending inventories.
Required: 
a.
Determine Valdez Mug's monthly break-even point in units.
b.
If monthly sales increase by 500 cups, what will be the change in monthly profits?
c.
If Valdez Mug is now subject to an income tax of 40 per cent, what pound sales volume is required to earn a monthly after-tax net income of £12,000?

Quizplus · Accepted Answer

The Answer of The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for £4.00 each. Variable and fixed costs are as follows:  Valdez Mug produced and sold 10,000 cups during April 2011. There were no beginning or ending inventories.
Required: 
a.
Determine Valdez Mug's monthly break-even point in units.
b.
If monthly sales increase by 500 cups, what will be the change in monthly profits?
c.
If Valdez Mug is now subject to an income tax of 40 per cent, what pound sales volume is required to earn a monthly after-tax net income of £12,000?

The Valdez Mug Company Manufactures Plastic Mugs That Sell to Wholesalers