Question

Multiple Product Planning with Taxes
In the year 2008, Wiggins Processing Company had the following contribution income statement:

WIGGINS PROCESSING COMPANY Contribution Income Statement For the Year 2008
Sales		$1,000,000
Variable costs
Cost of goods sold	$460,000
Selling and administrative	200,000	(660,000)
Contribution margin		340,000
Fixed Costs
Factory overhead	192,000
Selling and administrative	80,000	(272,000)
Before-tax profit		68,000
Income taxes (38%)		(25,840)
After-tax profit		$42,160

HINT: Round the contribution margin ratio to two decimal places for your calculations below.

(a) Determine the annual break-even point in sales dollars.
$Answer

(b) Determine the annual margin of safety in sales dollars.
$Answer

(c) What is the break-even point in sales dollars if management makes a decision that increases fixed costs by $34,000?
Answer

(d) With the current cost structure, including fixed costs of $272,000, what dollar sales volume is required to provide an after-tax net income of $160,000?

Do not round until your final answer. Round your answer to the nearest dollar.
$Answer

(e) Prepare an abbreviated contribution income statement to verify that the solution to part (d) will provide the desired after-tax income.

Round your answers to the nearest dollar. Use rounded answers for subsequent calculations. Do not use negative signs with any of your answers.

WIGGINS PROCESSING COMPANY Income Statement For the Year 2008
Sales	$Answer
Variable costs	Answer
Contribution margin	Answer
Fixed costs	Answer
Net income before taxes	Answer
Income taxes (38%)	Answer
Net income after taxes	$Answer *****please help me get the just right answer to this question .... thanks a lot ....

Answer 1

A Anual break even ponit in sales dollars C) What is the break-even point in sales dolars if management makes a decision that increases fxed costs by $34.000? Revised Fixed Cost -272000 34000 Contribution margin ratio Contribution Margin/Sales $306,000.00 3,40,000 10,00,000 Annual break even point in sales dollars Fixed cost/contribution margin ratio 3436 Annual break even point in sales dolars-Fixed cost contribution margin ratio $ 900,000.00 2,72,000/34% D) Wth the current cost structure, including fixed costs of $272,000, what dollar sales volume is required to provide an after-tax net income of $160,000? $800,000.00 Net Income After Tax 160,000.00 98,064.52 Net Income Before Tax 258064.5161 5272,000.00 Add B) Annual margin of safety in sales dolars Add Fixed Cost -Actual Sales Break ewen sales -$10,00,000 $800,000 Sales 530064.52/34% $ 1,559,013 $200,000 Answer $1,559,013 E) Amount ales Variable Cost 1,559,013 1,028,949 Contribution Margin Fioed Cost 5 530,06 272 2S8,064 98,064 Net Income Before Tax Net Income Aftor Tax 160,000