Power Grid Engineering Associates, Inc._CVP Analysis
Exercise 7-33
Power Grid
Engineering Associates, Inc. provides consulting services to commercial
electric utilities. The consulting firmâs contribution-margin ratio is 15% and
its annual fixed expenses are $285,000. The firmâs income tax rate is 30%.
Required:
1. Calculate the firmâs 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?
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