Question

Wang Co. manufactures and sells a single product that sells for $300 per unit; variable costs are $174. Annual fixed costs are $852,600. Current sales volume is $4,230,000. Compute the break-even point in units.

Wang Co. manufactures and sells a single product that sells for $250 per unit; variable costs are $145 per unit. Annual fixed costs are $873,600. Current sales volume is $4,280,000. Management targets an annual pre-tax income of $1,205,000. Compute the unit sales to earn the target pre-tax net income.

Wang Co. manufactures and sells a single product that sells for $640 per unit; variable costs are $352 per unit. Annual fixed costs are $985,500. Current sales volume is $4,390,000. Compute the current margin of safety in dollars

Answer 1

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Statement showing Computations
Particulars	Amount
Sales price per unit	300.00
Less Variable Expenses per unit	(174.00)
Contribution Margin per unit	126.00
Fixed expenses	852,600.00
break-even point in units= 852,600/126	6,767
b)
Sales price per unit	250.00
Less Variable Expenses per unit	(145.00)
Contribution Margin per unit	105.00
Fixed expenses	873,600.00
annual pre-tax income	1,205,000.00
Contribution desired	2,078,600.00
unit sales to earn the target pre-t+A4975ax net income. = 2078600/105	19,796
c)
Sales price per unit	640.00
Less Variable Expenses per unit	(352.00)
Contribution Margin per unit	288.00
CM Ratio = 288/640	45.00%
Fixed expenses	985,500.00
break-even point in $ =985500/45%	2,190,000
Current sales volume	4,390,000.00
current margin of safety in dollars = 4390,000 - 2190,000	2,200,000.00