Assume the following cost behaviour data for Portrait Company: $$\begin{array} { l l l }
\text { Sales price } & \$ 18.00 & \text { per unit } \
\text { Variable costs } & \$ 13.50 & \text { per unit } \
\text { Fixed costs } & \$ 22,500 & \
\text { Tax rate } & 40\% &
\end{array}$$
-What volume of sales dollars is required to earn a before-tax income of $27,000?

Question

Assume the following cost behaviour data for Portrait Company: $$\begin{array} { l l l } 
\text { Sales price } & \$ 18.00 & \text { per unit } \
\text { Variable costs } & \$ 13.50 & \text { per unit } \
\text { Fixed costs } & \$ 22,500 & \
\text { Tax rate } & 40\% &
\end{array}$$ 
-What volume of sales dollars is required to earn a before-tax income of $27,000?

Quizplus · Accepted Answer

To calculate the volume of sales dollars required to earn a before-tax income of $27,000, we can use the following formula:

Sales - Variable Costs - Fixed Costs = Before-tax Income

Plugging in the given data, we get:

Sales - 0.4(Sales) - $56,000 = $27,000

0.6(Sales) = $83,000

Sales = $138,333.33

Therefore, the closest answer option is C) $198,000.

Assume the Following Cost Behaviour Data for Portrait Company -What Volume of Sales Dollars Is Required to Earn a