Lorna Corporation Has Determined the Contribution Margin Ratio Is 35

question 61

Essay

Lorna Corporation has determined the contribution margin ratio is 35% and the income tax rate is 40%.
Required:
A) Assume break-even volume in dollars is $1,500,000. What are total fixed costs?
B) Assume Lorna Corporation wants after-tax net income of $300,000. What volume of sales in dollars is necessary to achieve this net income?

• A) Assume break-even volume in dollars is $1,500,000. What are total fixed costs?
• B) Assume Lorna Corporation wants after-tax net income of $300,000. What volume of sales in dollars is necessary to achieve this net income?

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Definitions:

Market Feel

An intuitive or subjective insight into market dynamics and customer behavior, often gained through experience rather than formal analysis.

Strip Mall

A retail shopping area, typically with parking in front, that is composed of a row of connected stores and services in a long and narrow layout.

Neighborhood Stores

Retail outlets located within residential areas that cater to the everyday needs of the local community.

Power Center

A large outdoor shopping mall typically composed of a small number of big box retailers and various smaller retailers, combining convenience with a wide range of options.