Extensions of the CVP Model—Taxes Odd Wallow Drinks is considering adding a new line of fruit juices…

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?