Question

Required information The following information applies to the questions displayed below] Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $20.00 per unit Annual fixed costs, $985, 800 Model no. 4399: Variable costs, $11.80 per unit Annual fixed costs, $1,114,600 Corrigan's selling price is $70 per unit for the universal gismo, which is subject to a 10 percent sales commission. (In the following requirements, ignore income taxes.) Required: 1. How many units must the company sell to break even if Model 6754 is selected? (Do not round Intermediate calculations and round your final answer up to nearest whole number.) Break-even point units

Answer 1

the solution for when ♡ If model 6754 is selected breakeven point . contribution margin per unit = sales Price ti variable cost (-) Conoor sales commission P = $70-20) Oxboy) = $43 Break even point unit's - Fixed cost contribution margin per Unit = 9.8 5,800 43 - 29.926 unit's (rounded to nearst a prop whole a number)

2 computation of net income for model No : 6754 - Amount($) 39,20,000 (3,22,000) sales revenue (46.000 units X 70) Less: variable cost- sales commission les commission (32,20,000 X10%) variable cost (46,000 x 20) contribution morgin - Less fixed cost (9,20,000) 19,78,000 9,85,800 1 Net Income - 9.92.200 model No: 4399 sales recenue (46.000 x 7o) 32,20,000 Less's variable cost - sales commission (3,22,000) (39,20,000*10%) variable cost (46.000X11.80) (5,49,800) contribution margin Lesst fixed cost 23,55,200 11. 14.600 - Net Income in 12, 40, 60o.

(alb)) model No usqa is profitable because the het Income is greater then model No 6754 » Annual fixed cost will increak by $ 90,000 14.50,000 because of straight line depreciation associated with how eauipment sk လယ် Total fixed cost = 11, 14, 6oof 90,000 - 12.04,600

unit contribution margina 23,55,200 46,000 = $51.2 desired sales = flued cost HiDesired Profit contribution per unit 12.04,600 + 9.71,000 51.2 = 42,492 unit's (rounded off) computation of indifference point model 675u (or) 4399 to acauire یہ لم Let X be the number units variable expenses model 6754 : 2017(70x10%)-27 model 4399 ? 11.80+ 7 = 18.8 Total cost for model of su = 9,85,800 427x Total cost for model 4399 = 1114, 600 + 18.88 At Indifference Point 9,85,800 427x = 11,114,600 + 18.8% 279-) 18.8% = 1.14.600 ) 9.85.800

8.2X = 1,28.800 X = 15,707 units.