Hammerhead charters runs fishing trips out of the local port. hammerhead charges $50 per trip for a half-day trip. variable costs for hammerhead total $20 per trip and the fixed costs are $6,000 per month. hammerhead is subject to an income tax rate of 25 percent.

required

a. how many trips must hammerhead sell to break even?
b. how many trips must hammerhead sell to earn a monthly operating profit of $9,000 after taxes?

1. Calculation of Break Even:

Break Even = Fixed Cost / Contribution per Unit

Fixed Cost = $6,000

Contribution per Unit = Selling Price - Variable cost per unit

Contribution per Unit = $50 - 20 = $30

Break Even = 6,000 / 30  

Break Even = 200 trips

2. Monthly Operating profit required = $9,000

Tax Rate = 25%

Before Tax Profit Required = 9,000 / (1-Tax rate)

Before Tax Profit Required = 9,000 / (1 - 0.25) = $12,000

Trips required to sell to earn a monthly operating profit of $9,000 after taxes = (6,000 + 12,000) / 30  

Trips required to sell to earn a monthly operating profit of $9,000 after taxes = 600

Trips required to sell to earn a monthly operating profit of $9,000 after taxes = 600 trips

answer; whoever is willing and able to pay the price;

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.