MBA 700 Gao - HW 4| Questions , Calculations and Answers
1.A company has pre-tax or operating income of $120,000. If the tax rate
is 40%, what is the company's after-tax income?
a. $72,000
b.$300,000
c.$240,000
d.$48,000: Pretax income =
$120,000 Tax Rate = 40%
Tax deductible: 120,000 * 40% = 48,000
Income after tax: 120,000 - 48,000 =
$72,000
$72,000
2.A company has wants to earn an income of $60,000 after-taxes. If the tax
rate is 32%, what must be the company's pre-tax income in order to have
$60,000 after taxes?
a. $88,235
b.$19,200
c.$79,200
d.$143,000: Required pre-tax income = After tax income/(1-tax rate)
Required pre-tax income = 60,000/(1-
32%) Required pre-tax income = $88,325
$88,235
3.A company's contribution margin per unit is $25. If the company
increases its activity level from 200 units to 350 units, how much will its total
contribution margin increase?
a. $8,750
b.$5,000
c.$1,250
d.$3,750: Increase in Number of goods sold (350 - 200) = 150 units
, MBA 700 Gao - HW 4| Questions , Calculations and Answers
Contribution Margin per unit = $25
, MBA 700 Gao - HW 4| Questions , Calculations and Answers
Increase in Contribution Margin
= Contribution Margin per unit x Increase in Number of goods sold
= 25 x 150
= 3,750
$3,750
4.Beaucheau Farms sells three products (E, F, and G) with a sale mix ratio
of 3:1:2. Unit sales price are shown.
Product E $11
Product F $8
Product G $9
What is the sales price per composite unit?
a. $59.00
b.$41.00
c.$28.00
d.$20.00: Product E: 3 x 11 = $33
Product F: 8 x 1 =
$8 Product G: 9 x 2
= $18
E ($33) + F ($8) + G ($18) = $59.00
$59.00
5.Break-even for a multiple products firm .
a.can be calculated by multiplying fixed costs by the contribution margin
ratio of the most common product in the sales mix
b.can be calculated by multiplying fixed costs by the contribution margin
ratio of a composite unit
c.can only be calculated when the proportion of products sold is the same fo
all products
d.can be calculated by dividing total fixed costs by the contribution margin
of a composite unit: Can only be calculated when the proportion of
products sold is the same for all products
1.A company has pre-tax or operating income of $120,000. If the tax rate
is 40%, what is the company's after-tax income?
a. $72,000
b.$300,000
c.$240,000
d.$48,000: Pretax income =
$120,000 Tax Rate = 40%
Tax deductible: 120,000 * 40% = 48,000
Income after tax: 120,000 - 48,000 =
$72,000
$72,000
2.A company has wants to earn an income of $60,000 after-taxes. If the tax
rate is 32%, what must be the company's pre-tax income in order to have
$60,000 after taxes?
a. $88,235
b.$19,200
c.$79,200
d.$143,000: Required pre-tax income = After tax income/(1-tax rate)
Required pre-tax income = 60,000/(1-
32%) Required pre-tax income = $88,325
$88,235
3.A company's contribution margin per unit is $25. If the company
increases its activity level from 200 units to 350 units, how much will its total
contribution margin increase?
a. $8,750
b.$5,000
c.$1,250
d.$3,750: Increase in Number of goods sold (350 - 200) = 150 units
, MBA 700 Gao - HW 4| Questions , Calculations and Answers
Contribution Margin per unit = $25
, MBA 700 Gao - HW 4| Questions , Calculations and Answers
Increase in Contribution Margin
= Contribution Margin per unit x Increase in Number of goods sold
= 25 x 150
= 3,750
$3,750
4.Beaucheau Farms sells three products (E, F, and G) with a sale mix ratio
of 3:1:2. Unit sales price are shown.
Product E $11
Product F $8
Product G $9
What is the sales price per composite unit?
a. $59.00
b.$41.00
c.$28.00
d.$20.00: Product E: 3 x 11 = $33
Product F: 8 x 1 =
$8 Product G: 9 x 2
= $18
E ($33) + F ($8) + G ($18) = $59.00
$59.00
5.Break-even for a multiple products firm .
a.can be calculated by multiplying fixed costs by the contribution margin
ratio of the most common product in the sales mix
b.can be calculated by multiplying fixed costs by the contribution margin
ratio of a composite unit
c.can only be calculated when the proportion of products sold is the same fo
all products
d.can be calculated by dividing total fixed costs by the contribution margin
of a composite unit: Can only be calculated when the proportion of
products sold is the same for all products
