Crunchy morsels inc manufactures and sells corn chips

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Crunchy Morsels, Inc. manufactures and sells corn chips. Currently, Crunchy produces only one type of corn chip. The chips are packaged in 11-ounce bags and sold to retailers for $1.50 per bag. The variable costs per bag are as follows:

Corn                                             $0.70
Vegetable Oil                                0.10
Miscellaneous ingredients             0.03
Selling                                           0.10

Fixed manufacturing costs total $300,000 per year. Administrative (fixed) costs total $100,000.

a. Compute the # of bags of corn chips that must be sold by Crunchy to breakeven?
b. How many bags of corn chips must be sold for Crunchy to earn a before-tax profit of $150,000?
c. Assuming a tax rate of 60%, how many bags of corn chips must be sold to earn an after-tax profit of $284,000?

Reference no: EM13566586

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