The carey company sold 100,000 units of its product at $20 per unit. variable costs are $14 per unit (manufacturing costs of $11 and selling costs of $3). Fixed costs are incurred uniformly throughout the year and amount to $792,000 (manufacturing costs of $500,000 and selling costs of $292,000). there are no beginning or ending inventories.

Required:

Determine the following:

1. The breakeven point for this product.

2. The number of units that must be sold to earn an income of $60,000 for the year (before income taxes).

3. The number of units that must be sold to earn an after-tax income of $90,000, assuming a tax rate of 40 percent.

4. The breakeven point for this product after a 10 percent increase in wages and salaries (assuming labor costs are 50 percent of variable costs and 20 percent of fixed costs).

Instructions are listed below.

Explanation:

Giving the following information:

Selling price= $20 per unit

Variable costs= $14 per unit

Fixed costs= $792,000

A) To calculate the break-even point in units, we need to use the following formula:

Break-even point= fixed costs/ contribution margin

Break-even point= 792,000 / (20 - 14)= 132,000 units

B) We need to sum the $60,000 as they were fixed costs:

Break-even point= (fixed costs + desired profit)/ contribution margin

Break-even point= (792,000 + 60,000) / 6= 142,000 units

C) After-tax profit of $90,000.

t= 0.40

Break-even point= [(fixed costs + desired profit)/ (1-t)] / contribution margin

Break-even point= [(792,000 + 90,000)  / (1 - 0.4)] / 6= 367,500 units

D) 10% increase in wages:

Variable costs= 4*1.05= 4.2

Fixed costs= 792,000*1.02= 807,840

Break-even point= 807,840/ 3.8= 212,589 units

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

commercial banking

provide online payment services

provide online banking

asset management firms

invest in people's funds in securities

accept tax return refunds