Extensions of the CVP Model—Taxes Odd Wallow Drinks is consi…
Extensions of the CVP Model—Taxes
Odd Wallow Drinks is considering adding a new line of fruit juices to its merchandise products. This line of juices has the following prices and costs:
Selling price per case (24 bottles) of juice
$ 50
Variable cost per case (24 bottles) of juice
$ 24
Fixed costs per year associated with
this product
$8,112,000
Income tax rate
40%
Required
a. Compute Odd Wallow Drinks’s break-even point in units per year.
b. How many cases must Odd Wallow Drinks sell to earn $1,872,000 per year after taxes on the juice?
