Ratchet Ltd expects to sell 30,000 units this year. The selling price is set at $25 per unit. The variable cost per unit is $12 and annual fixed cost is $345,000. Assume a tax rate of 28%. Required: Calculate the following: Break-even point in dollars. Margin of safety in dollars. Number of units Ratchet Ltd has to sell to earn an after-tax profit of $420,000.

Ratchet Ltd expects to sell 30,000 units this year. The selling price is set at $25 per unit. The variable cost per unit is $12 and annual fixed cost is $345,000. Assume a tax rate of 28%. Required: Calculate the following: Break-even point in dollars. Margin of safety in dollars. Number of units Ratchet Ltd has to sell to earn an after-tax profit of $420,000.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EB: Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are...

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