Question

SBD Phone Company sells its waterproof phone case for $106 per unit. Fixed costs total $242,000, and variable costs are $42 per unit. Compute the units of product that must be sold to earn pretax income of $214,000.

 Units to be sold to achieve targeted income Choose Denominator: 

SBD Phone Company sells its waterproof phone case for $95 per unit. Fixed costs total $176,700, and variable costs are $38 per unit.

 (1) Determine the contribution margin per unit. 

(2) Determine the break-even point in units. 

X-Tel budgets sales of $80,000 for April, $88,000 for May, and $40,000 for June. 

In addition, sales are 60% cash and 40% on credit. All credit sales are collected in the month following the accounts receivable is $11,000. Prepare a schedule of budgeted cash receipts for April, May, and June. 

Answer 1

1 Sale price of case Variable cost $ 106.00 42.00 Fixed Costs $242,000.00 Income required $214,000.00 (Fixed Cost+Income required)/Contribution Margin per unit Units to be sold to achieve target income Sale price of case Variable cost $ 106.00 42.00 Contribution Margiin $ 64.00 Units to be sold to achieve target income (242000+214000) 64 7125.00 Units 2 Sale price of case $ 95.00 Variable cost 38.00 Contribution Margin $ 57.00 per units Break even in units Fixed Cost/Contributon margin per unit 176700/57 3100 units