Wilson CoIs Preparing Next Period's Forecasts

question 100

Essay

Wilson Co.is preparing next period's forecasts.Total fixed costs are expected to be $300,000 and the contribution margin ratio is expected to be 30%.The applicable income tax rate is 25%.
a.Calculate the company's break-even point in dollar sales.
b.If sales are $1,800,000 above the break-even point,what will income be pretax income and after-tax income?

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Definitions:

Hostile Takeovers

Hostile takeovers occur when one company tries to acquire another without the consent or cooperation of the target company's management or board.

Targeted Share Repurchases

Also known as greenmail, occurs when a company selectively buys back stock from a potential acquirer at a price that is higher than the market price. In return, the potential acquirer agrees not to attempt to take over the company.

Cumulative Voting

A voting system used in elections, where shareholders multiply the number of shares they own by the number of director positions available to get their total number of votes.

Corporate Governance

The set of rules that controls a company's behaviour toward its directors, managers, employees, shareholders, creditors, customers, competitors, and community.