(CVP; taxes) Sheridan Shacks makes portable garden sheds that sell for $1,800 each. Costs are as follows:
Per Unit
Total
Direct material
$800
Direct labor
90
Variable production overhead
60
Variable selling and administrative cost
50
Fixed production overhead
$200,000
Fixed selling and administrative
60,000
Assume a tax rate for the company of 35 percent.
a. If Sheridan Shacks wants to earn an after-tax profit of $182,000, how many garden sheds must it sell?
b. How much revenue is needed to yield an after-tax profit of 8 percent of revenue? How many garden sheds does this revenue amount represent?