Assume the following cost information for Johnson Company: Selling price $190 per unit Variable costs $80 per unit Total fixed costs $95,000 Tax rate 21% If Johnson Company desires to earn $30,000 net income: What is the target operating income it must earn? Assume the tax rate is 21% How many units must be sold to achieve this target operating income? What amount of sales revenue must be earned to achieve this target operating income?

Assume the following cost information for Johnson Company: Selling price $190 per unit Variable costs $80 per unit Total fixed costs $95,000 Tax rate 21% If Johnson Company desires to earn $30,000 net income: What is the target operating income it must earn? Assume the tax rate is 21% How many units must be sold to achieve this target operating income? What amount of sales revenue must be earned to achieve this target operating income?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13E

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

Assume the following cost information for Johnson Company:

Selling price $190 per unit

Variable costs $80 per unit

Total fixed costs $95,000

Tax rate 21%

If Johnson Company desires to earn $30,000 net income:

What is the target operating income it must earn? Assume the tax rate is 21%

How many units must be sold to achieve this target operating income?

What amount of sales revenue must be earned to achieve this target operating income?

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