Benjamin Company has the following information available:
$\begin{array}{ll}
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 5.00 \
\text { Variable cost per unit } & \$ 3.00\
\text { Total fixed costs }&\$90,000.00
\end{array}$
If Benjamin Company wants a targeted after-tax net income of $14,000,how many units must be sold?
A) 45,000
B) 52,000
C) 55,000
D) 60,000

Question

Quizplus · Accepted Answer

First, calculate the required pre-tax income by dividing the targeted after-tax net income by (1 - tax rate): $14,000 / (1 - 0.30) = $20,000. Then, calculate the contribution margin per unit: $5.00 - $3.00 = $2.00. Finally, divide the sum of total fixed costs and required pre-tax income by the contribution margin per unit: ($90,000 + $20,000) / $2.00 = 55,000 units.

Benjamin Company Has the Following Information Available If Benjamin Company Wants a Targeted After-Tax Net Income of tax