Xcite Equipment Co. manufactures and markets a number of rope products.
Management is considering the future of Product XT, a special rope for
hang gliding, that has not been as profitable as planned. Since Product
XT is manufactured and marketed independently of the other products, its
total costs can be precisely measured. Next year’s plans call for a
$330 selling price per 100 yards of XT rope. Its fixed costs for the
year are expected to be $211,200, up to a maximum capacity of 550,000
yards of rope. Forecasted variable costs are $264 per 100 yards of XT
rope.

## Friday, 13 February 2015

### Spiller Corp. plans to issue 10%, 6-year, $570,000 par value bonds payable that pay interest semiannually on June 30 and December 31. The bonds are dated December 31, 2013, and are issued on that date. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.) If the market rate of interest for the bonds is 8% on the date of issue, what will be the total cash proceeds from the bond issue?

Spiller
Corp. plans to issue 10%, 6-year, $570,000 par value bonds payable that
pay interest semiannually on June 30 and December 31. The bonds are
dated December 31, 2013, and are issued on that date. (PV of $1, FV of $1, PVA of $1, and FVA of $1)

**(Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar.)**
If
the market rate of interest for the bonds is 8% on the date of issue,
what will be the total cash proceeds from the bond issue?

### Blanchard Company manufactures a single product that sells for $184 per unit and whose total variable costs are $138 per unit. The company’s annual fixed costs are $632,000. The sales manager predicts that annual sales of the company’s product will soon reach 40,200 units and its price will increase to $202 per unit. According to the production manager, the variable costs are expected to increase to $142 per unit but fixed costs will remain $632,000. The income tax rate is 30%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes?

Blanchard Company manufactures a single product that sells for $184 per
unit and whose total variable costs are $138 per unit. The company’s
annual fixed costs are $632,000. The sales manager predicts that annual
sales of the company’s product will soon reach 40,200 units and its
price will increase to $202 per unit. According to the production
manager, the variable costs are expected to increase to $142 per unit
but fixed costs will remain $632,000. The income tax rate is 30%. What
amounts of pretax and after-tax income can the company expect to
earn from these predicted changes?

### Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $180 per unit. The company targets an annual after-tax income of $900,000. The company is subject to a 40% income tax rate. Assume that fixed costs remain at $954,000.

Blanchard Company manufactures a single product that sells for $240 per
unit and whose total variable costs are $180 per unit. The company
targets an annual after-tax income of $900,000. The company is subject
to a 40% income tax rate. Assume that fixed costs remain at $954,000.

(1) Compute the unit sales to earn the target after-tax net income.

Explanation:

Explanation:

Preliminary computations |

Pretax income | = After-tax income / (1 – Tax rate) |

= $900,000 / (1 – 0.40) | |

= $900,000 / 0.60 | |

= $1,500,000 |

Income taxes | = Pretax income × Tax rate |

= $1,500,000 × 0.40 = $600,000 |

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