Problem

CVP Analysis Lawn Master Company, a manufacturer of riding lawn mowers, has a projected in...

CVP Analysis Lawn Master Company, a manufacturer of riding lawn mowers, has a projected income for 2010 as follows:

Sales

 

$46,000,000

Operating expenses

 

 

Variable expenses

$32,200,000

 

Fixed expenses

7,500,000

 

Total expenses

 

39,700,000

Operating Profit

 

$ 6,300,000

Required

1. Determine the breakeven point in sales dollars.


2. Determine the required sales in dollars to earn a before-tax profit of $7,250,000.


3. What is the breakeven point in sales dollars if the variable cost increases by 10 percent?

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