Question

Problem 3-50 (Algo) CVP Analysis-Missing Data (LO 3-1)

Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 166,000 units (produced and sold).

	Total Annual Costs (166,000 units)
Direct material	$	281,000
Direct labor		270,000
Manufacturing overhead		214,000
Selling, general, and administrative		138,000
Total	$	903,000

Required:

a. Compute Breed’s unit selling price that will yield a profit of $491,400, given sales of 166,000 units.

b. Compute Breed’s dollar sales that will yield a projected 29 percent profit on sales, assuming variable costs per unit are 53 percent of the selling price per unit and fixed costs are $385,200.

c. Management believes that a selling price of $7.70 per unit is reasonable given current market conditions. How many units must Breed sell to generate the revenues (dollar sales) determined in requirement (b)?

Answer 1

solution: (a) calculating Breed's conut selling poice & Total cost incurred = $903000 Desired profit = $491400 Total = $139440o. Unit selling price. Total cost incarred & Desired profit Number of units sold = $ 1294400 166000 = 8.4 The unitselling price to get a profit of $491400 is $8.4 Assume sales of company Breed is 'x. contribution = sales - rasiable costs b) 3 2-0-63 = 0.472 profit= contribution- fired cost 0.292 = 0.472-385200 0.18x = 385200 2 38320D 2- $ 2140000

Therefore, the dollar sales a 20% propific that yield $ 2140000 C Calculate the number of units to be sold to get sabes of $2140000 - Dotal sales = $ 21400od Desired unit selling price 37.70 Number of croits sold = Total Desired sales unit selling poice 214OOOD 7.7 = 277922 units. The refore, the number of mits to be sold is $277922 units