Question

Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows:

Number of canoes produced and sold		550		750		900
Total costs
Variable costs	$	110,000	$	150,000	$	180,000
Fixed costs	$	99,000	$	99,000	$	99,000
Total costs	$	209,000	$	249,000	$	279,000
Cost per unit
Variable cost per unit	$	200.00	$	200.00	$	200.00
Fixed cost per unit		180.00		132.00		110.00
Total cost per unit	$	380.00	$	332.00	$	310.00

Required:
1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars. (Do not round intermediate calculations. Round your final answers to nearest whole number.)

New Break-Even Units
Break-Even Sales Revenue

2. If Sandy Bank sells 1,590 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $500.) (Round your answers to the nearest whole number.)

Margin of safety
Percentage of Sales

3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $130,000 profit. (Round your answer to the nearest whole number.)

Target Sals Units
X	X
X	X

Answer 1

2) New break even point = 99000/(500-200) = 330 Units

Break even sales revenue = 330*500 = $165000

3) Margin of safety = (1590-330)*500 = $630000

Margin of safety percentage = 1590-330/1590 = 79%

4) Target sales unit = (130000+99000)/300 = 763 Units