Heady Company sells headbands to retailers for $5. The variable cost of goods sold per headband is $1, with a selling commission of 10 percent of sales. Fixed manufacturing costs total $25,000 per month, while fixed selling and administrative costs total $10,500. The income tax rate for Heady Company is 30 percent.
Required:
a. What is the break-even point in headbands?
b. What are target sales in headbands to generate a before-tax income of $3,000?
c. What are target sales in headbands to generate an after-tax income of $3,080?
d. What is net income assuming Heady sells total 15,000 headbands?

Question

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The Answer of Heady Company sells headbands to retailers for $5. The variable cost of goods sold per headband is $1, with a selling commission of 10 percent of sales. Fixed manufacturing costs total $25,000 per month, while fixed selling and administrative costs total $10,500. The income tax rate for Heady Company is 30 percent.
Required:
a. What is the break-even point in headbands?
b. What are target sales in headbands to generate a before-tax income of $3,000?
c. What are target sales in headbands to generate an after-tax income of $3,080?
d. What is net income assuming Heady sells total 15,000 headbands?

Heady Company Sells Headbands to Retailers for $5