Identifying Break-Even Point, Analyzing How Price Changes Affect Profitability; Calculating Margin of Safety, Target Profit
Refer to the information in E6-4 regarding Paddle Away.
Required:
1.Suppose that Paddle Away raises its selling price to $675 per canoe. Calculate its new break-even point in units and in sales dollars.
2.If Paddle Away sells 650 canoes, compute its margin of safety in units and as a percentage of sales. (Use the new sales price of $675.)
3.Calculate the number of canoes that Paddle Away must sell at $675 each to generate $100,000 profit.
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