Flannigan Company Manufactures and Sells a Single Product That Sells

question 35

Multiple Choice

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Flannigan Company management targets an annual pre-tax income of $1,125,000.Compute the dollar sales to earn the target pre-tax net income.

• A)$5,640,000.
• B)$5,990,990.
• C)$3,378,378.
• D)$2,991,004.
• E)$2,612,613.

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Definitions:

Disposable Income

The budget left for household savings and spending after the deduction of income taxes.

Autonomous Consumption

The level of consumption that occurs when income is zero, representing basic necessities that individuals will purchase regardless of their income.

APC

It is defined as the proportion of income that goes into consumption expenses, termed as the Average Propensity to Consume.

Disposable Income

Fiscal assets at households' disposal for spending and saving after income taxes have been subtracted.