Question

Required information [The following information applies to the questions displayed below.] Adams Company makes and sells products with variable costs of $24 each. Adams incurs annual fixed costs of $321,280. The current sales price is $88. Note: The requirements of this question are interdependent. For example, the $256,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements. . If fixed costs drop to $282,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars. repare an income statement using the contribution margin format. Complete this question by entering your answers in the tabs below. Reg E1 Reg E2 If fixed costs drop to $282,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars. (Do not round intermediate calculations. Round your final answers to the nearest dollar and round units up to the next whole unit.) Sales volume in units Sales volume in dollars ROG E1 Req E2 >

Answer 1

Contribution margin per unit:

= $88 - $24

= $64

1.

Sales volume in units:

= ($256,000 + $282,000) / $64

= 8,407

Sales volume in dollars:

= 8,407 X $88

= $739,816

2.

Sales	$739,816
Variable cost	$201,768
Contribution margin	$538,048
Fixed cost	$282,000
Net operating income	$256,048