Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 3, Problem 70P
Extensions of the CVP Model—Taxes With Graduated Rates
Hastings & Daughters produces and sells a component used in general aviation aircraft engines. Each unit is priced at $25 and the variable cost for each unit is $17. The annual fixed cost is $112,000. Hastings operates in a jurisdiction with a graduated tax structure and pays a rate of 25 percent on annual taxable income up to and including $100,000 and a rate of 40 percent on annual income above $100,000.
Required
- a. How many units must Hastings & Daughters sell to break even?
- b. Ms. Hastings, the president of Hastings & Daughters, decides that it is not worth being in business if the company cannot make at least $90,000 annually after taxes. How many units must Hastings & Daughters sell in order to make the $90,000 requirement?
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Required:
Affiliate A sells 5,600 units to Affiliate B per year. The marginal income tax rate for Affiliate A is 25 percent and the marginal income tax
rate for Affiliate B is 40 percent. Additionally, Affiliate B pays a tax-deductible tariff of 5 percent on imported merchandise. The transfer
price per unit is currently $2,000, but it can be set at any level between $2,000 and $2,400. Derive (a) a formula to determine the
effective marginal tax rate for Affiliate B and (b) a formula to determine how much annual after-tax profits can be increased by selecting
the optimal transfer price.
Note: Do not round intermediate calculations. Enter the "Effective marginal tax rate" as percentage rounded to whole number.
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Assuming that a Nissan Car Manufacturing Company sold 100 cars to the wholesale trader for OMR 7,500 each plus VAT. The wholesale trader sold all the 100 cars to the retailer showroom for OMR 8,000 each plus VAT. The retailer showroom realized OMR 850,000 after selling all the 100 cars to the local customers plus VAT. Assume the rate of Value Added Tax (VAT) throughout in Oman is 5%. There Input tax credit available in Nissan Car Manufacturing Company account was OMR 42,500.
ANSWER QUESTION NO 15 TO 18
Question 15
What will be the total tax burden by the consumers?
a.
OMR 85,000
b.
OMR 42,500
c.
OMR 40,000
d.
OMR 47,500
Question 16
Which of the following statement will be correct for Nissan Car Manufacturer?
a.
Tax to be refunded from Government is OMR 5000
b.
Tax to be payable to Government is OMR 37,500
c.
Tax to be refunded from Government is OMR 42,500
d.
Tax to be payable to Government is OMR 5000
Question 17
What will be the…
Tax
Required information
[The following information applies to the questions displayed below.]
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA
Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid
to its employee.
FUTA
SUTA
b)
Tax
Compute BMX's amounts for each of these four taxes as applied to the employee's gross earnings for September under each of three
separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)
b.
FICA-Social Security
FICA-Medicare
FUTA
SUTA
c)
Tax
Gross Pay
through August
$ 6,700
18,500
112,500
FICA-Social Security
FICA-Medicare
FUTA
SUTA
FICA-Social Security
FICA-Medicare
Gross Pay for
September
$ 400
2,400
8,300
September Earnings
Subject to Tax
400.00
400.00
S
September Earnings
Subject to Tax
September Earnings
Subject to Tax
Tax Rate Tax Amount
6.20% $
1.45%
0.60%
2.90%
Tax Rate
Tax Rate
24.80
5.80
Tax…
Chapter 3 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 3 - Write out the profit equation and describe each...Ch. 3 - What are the components of total costs in the...Ch. 3 - How does the total contribution margin differ from...Ch. 3 - Compare cost-volume-profit (CVP) analysis with...Ch. 3 - Fixed costs are often defined as fixed over the...Ch. 3 - Prob. 6RQCh. 3 - What is the margin of safety? Why is this...Ch. 3 - Prob. 8RQCh. 3 - Write out the equation for the target volume (in...Ch. 3 - How do income taxes affect the break-even...
Ch. 3 - Why is it common to assume a fixed sales mix...Ch. 3 - What are some important assumptions commonly made...Ch. 3 - Prob. 13CADQCh. 3 - Prob. 14CADQCh. 3 - The typical cost-volume-profit graph assumes that...Ch. 3 - The assumptions of CVP analysis are so simplistic...Ch. 3 - Prob. 17CADQCh. 3 - Consider a class in a business school where volume...Ch. 3 - Prob. 19CADQCh. 3 - Prob. 20CADQCh. 3 - Consider the Business Application,...Ch. 3 - Consider the Business Application,...Ch. 3 - Prob. 23CADQCh. 3 - Profit Equation Components Identify each of the...Ch. 3 - Profit Equation Components Identify the letter of...Ch. 3 - Basic Decision Analysis Using CVP Anus Amusement...Ch. 3 - Basic CVP Analysis The manager of Dukeys Shoe...Ch. 3 - CVP AnalysisEthical Issues Mark Ting desperately...Ch. 3 - Basic Decision Analysis Using CVP Derby Phones is...Ch. 3 - Prob. 30ECh. 3 - Basic Decision Analysis Using CVP Warner Clothing...Ch. 3 - Basic Decision Analysis Using CVP Refer to the...Ch. 3 - Prob. 33ECh. 3 - Prob. 34ECh. 3 - Analysis of Cost Structure Spring Companys cost...Ch. 3 - CVP and Margin of Safety Bristol Car Service...Ch. 3 - CVP and Margin of Safety Caseys Cases sells cell...Ch. 3 - Prob. 38ECh. 3 - Prob. 39ECh. 3 - Refer to the data for Derby Phones in Exercise...Ch. 3 - Refer to the data for Warner Clothing in Exercise...Ch. 3 - CVP with Income Taxes Hunter Sons sells a single...Ch. 3 - CVP with Income Taxes Hammerhead Charters runs...Ch. 3 - Prob. 44ECh. 3 - Prob. 45ECh. 3 - Prob. 46ECh. 3 - Prob. 47ECh. 3 - CVP Analysis and Price Changes Argentina Partners...Ch. 3 - Prob. 49PCh. 3 - CVP AnalysisMissing Data Breed Products has...Ch. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - CVP AnalysisSensitivity Analysis (spreadsheet...Ch. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Extensions of the CVP ModelSemifixed (Step) Costs...Ch. 3 - Prob. 57PCh. 3 - Extensions of the CVP ModelTaxes Odd Wallow Drinks...Ch. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Extensions of the CVP ModelTaxes Toys 4 Us sells...Ch. 3 - Extensions of the CVP AnalysisTaxes Eagle Company...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Extensions of the CVP ModelMultiple Products and...Ch. 3 - Extensions of the CVP ModelTaxes With Graduated...Ch. 3 - Prob. 71PCh. 3 - Financial Modeling Three entrepreneurs were...
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