Question

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate the company's current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. (Do not round intermediate calculations and round your final answers to nearest whole dollar.) needed to double that figure, asuming Current income Required dollar sales $ 457,500 $ 4,300,000 < Required 1 Required 2 >

Answer 1

Current Income = Sales – Variable costs – Fixed costs

= 3,690,000-922,500-2,310,000

= $457,500

Contribution Margin ratio = (Sales – variable costs)/Sales

= (3,690,000-922500)/3690000

= 75%

Dollar Sales required to double income = (Desired Income + Fixed costs)/CM ratio

= (457500*2 + 2310000)/75%

= $4,300,000

2. Break even point in speaker sets = Fixed costs/(Selling price per unit – Variable cost per unit)

= 1,992,000/(82-20)

= 32,129.03 speakers

i.e. 32,129 speakers

3.Let the required fixed costs be x

32,129 = x/(82-20.5)

X = $1,975,933.5

Fixed costs to decrease by 334,066.5

Let required variable cost be x

32,129 = 2,310,000/(82-x)

X = $10.10

Decrease by 10.4 per unit