(CVP; taxes) Golf Glider makes gasoline-powered golf carts. The selling price is $5,000 each, and costs are as follows:
Cost
Per Unit
Total
Direct material
$2,000
Direct labor
625
Variable overhead
325
Variable selling
50
Annual fixed production overhead
$250,000
Annual fixed selling and administrative
120,000
Golf Glider’s income is taxed at a 40 percent rate.
a. How many golf carts must Golf Glider sell to earn $600,000 after tax?
b. What level of revenue is needed to yield an after-tax income equal to 20 percent of sales?