Question

Assume that your R&D team has a new design for their product Able next round that can reduce their material cost of producing units from $8.59 to $7.73. They pass on half of all cost savings by cutting the current price to customers. For simplicity:

• Use current labor cost of $8.37
• Assume all period costs as reported on Andrews Income Statement for Asia Pacific (Annual Report Page 5) will remain the same.
• Current price is equivalent to $30.00
• Shipping cost to Asia Pacific is $2.50 per unit

Determine how many units (000's) of product Able would need to be sold in Asia Pacific alone next round to break even on the product.

MUST PROVIDE ONE OF THE BELOW ANSWER: 302 units OR  371 units OR 297 units OR 357 units OR 386 units

Answer 1

Break even sales - Fixed costs or periodic costs / contribution per unit

contribution per unit - selling price - all variable costs

contribution per unit - 30-(7.73+8.37+2.5) - Sale price - (Mat.cost+lab cost+shipping cost) - 11.4

break even sales - periodic costs given in annual report page / 11.4 - break even sales.

since periodic costs are not given in the question answer is not concluded, please mention periodic costs in comments to get the final answer. or can be computed on your own.