Power Grid Engineering Associates, Inc._CVP Analysis

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Exercise 7-33

Power Grid Engineering Associates, Inc. provides consulting services to commercial electric utilities. The consulting firm’s contribution-margin ratio is 15% and its annual fixed expenses are $285,000. The firm’s income tax rate is 30%.

Required:

1.       Calculate the firm’s break-even volume of service revenue.

2.       How much before tax income must the firm earn to make an after tax net income of $154,000?

 

3.        What level of revenue for consulting services must the firm generate to earn an after tax net income of $154,000?

 

    • 7 years ago
    Power Grid Engineering Associates, Inc._CVP Analysis
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