2) A corporation sells 66,000 units of a product for $19.75 each; the variable cost per...
2) A corporation sells 66,000 units of a product for $19.75 each; the variable cost per unit is $11.50 each. The fixed costs are $315,000.
Required
A) breakeven units and dollars.
B) how many units must be sold to achieve targeted income of $465,0007
C) What is the margin of safety in dollars and percentage?
D) What is the operating leverage?
E) The sales manager wants to raise prices by $2.00 each; demand will drop by ten percent, and the firm will spend an additional $95,000 on advertising. Will the firm increase income?
F) The manufacturing manager wants to automate a production line and reduce variable costs to $10.00 each. Fixed costs will increase by $75,000. Will the firm increase income?
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2) A corporation sells 66,000 units of a product for $19.75
each; the variable cost per...
2) A corporation sells 66,000 units of a product for $19.75 cach; the variable cost per...
2) A corporation sells 66,000 units of a product for $19.75 cach; the variable cost per unit is $11.50 cach. The fixed costs are $309,000. Required A) breakeven units and dollars. 8) how many units must be sold to achieve targeted Income of SAG5,000? c) What is the morgin of safety in dollars and percentage? D) What is the operating leverage? E) The sales manager wants to raise prices by $2.00 each; demand will drop by ten percent, and the...
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example...
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2. The Poncho Company sells ponchos at $60 each. The variable cost per unit is 50%...
2. The Poncho Company sells ponchos at $60 each. The variable cost per unit is 50% of the sales price and the total fixed costs are $300,000. During the summer, the Poncho Company renovated its factory. As a result, its total fixed costs increased by another $96,000 and variable costs decreased to 40% of the sales price. Determine the breakeven point in units and dollars before and after the renovation, using the contribution margin technique. Units Dollars Breakeven before modernization:...
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7) Total Variable cost = Number of units sold x variable cost per unit 8) Operating Leverage = Contribution Margin / Net Income Complete the below table: Sales Variable Cost Total Contribution Margin Fixed Costs Operating Income Break-even Sales Revenue 150,000 125,000 50,000 B 85,000 35,000 15,000 75,000 65,000 113,750 D 180,000 50,000 144,000 Remember: 1) Variable costs rise and fall with an increase or decrease in revenue 2) Fixed costs do not rise and fall with an increase or...
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The Brewer Company manufactures and sells pens. Currently, 5,300,000 units are sold per year at $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit Read the requirements. Requirements Requireme (a) Start by Operating income Consider each case separately: 1. a. What is the current annual operating income? b. What is the current breakeven point in revenues? Compute the new operating income for each of the following changes: 2. A $0.08 per unit increase in...
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Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00 180.00 2,400.00 500.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 8.00 4.50 2,400.00 500.00 0.25 Sales 200 units at 300 dollars Less Variable Costs (180 at 200 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 60,000.00 36,000.00 2,400.00 21,600.00 500.00 21,100.00 5,275.00 15,825.00 Sales 2000...
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Scott Confectionery sells its Stack-o-Choc candy bar for $0.80. The variable cost per unit for the...
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2) A corporation sells 66,000 units of a product for $19.75 cach; the variable cost per unit is $11.50 cach. The fixed costs are $309,000. Required A) breakeven units and dollars. 8) how many units must be sold to achieve targeted Income of SAG5,000? c) What is the morgin of safety in dollars and percentage? D) What is the operating leverage? E) The sales manager wants to raise prices by $2.00 each; demand will drop by ten percent, and the...
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. (1) Calculate the breakeven point in units and sales dollars. (2) Prepare a contribution margin income statement to...
2. The Poncho Company sells ponchos at $60 each. The variable cost per unit is 50% of the sales price and the total fixed costs are $300,000. During the summer, the Poncho Company renovated its factory. As a result, its total fixed costs increased by another $96,000 and variable costs decreased to 40% of the sales price. Determine the breakeven point in units and dollars before and after the renovation, using the contribution margin technique. Units Dollars Breakeven before modernization:...
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