Answer Happy

BREAKEVEN- The Car Company The car company manufactures and sells Waxworks car polish. This expensive polish is priced at $20 per can (applicator sponge included). Car Company's costs are: Fixed costs (per month) Variable Costs per can Manufacturing $500000 Manufacturing $11 Selling costs 292000 Selling 1. Find the monthly breakeven quantity using the above data. 3 2. How many cans must be sold to earn $60000 per month above breakeven (before taxes)? 3. What is the Contribution Margin Ratio (CMR), using the costs in (#2)? 4. If variable selling costs increase from $3 to 20% more per can, what is the new break even quantity, assuming $60000 per month before taxes is to be earned? 5. Assuming a 40% tax rate, how many cans must be sold to earn an after-tax income of $90000 above breakeven assume variable selling costs per can increase from $3 to 20% more per can (as they did in #4 above)? Hint: The before- tax income that yields an after-tax income of $90000 must be 6X = $90000. Thus X = $$$ before-tax and this can be added to the $792000 of fixed costs. 6. What is the DOL in (#4) above?