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Accounting

Power Grid Engineering Associates, Inc., provides consulting services to commercial electric utilities. The consulting firm's contribution-margin ratio is 30 percent, and its annual fixed expenses are $240,000. The firm's income-tax rate is 45 percent.

Calculate the firm's break-even volume of service revenue.

How much before-tax income must the firm earn to make an after-tax net income of $136,000? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

What level of revenue for consulting services must the firm generate to earn an after-tax net income of $136,000? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

Suppose the firm's income-tax rate declines to 35 percent. What will happen to the break-even level of consulting service revenue?

	The break-even level of consulting service revenue will not change.
	The break-even level of consulting service revenue will increase.
	The break-even level of consulting service revenue will decrease.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9797684

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