"Breakeven Analysis and Planning Future Sales"…Complete Answer! Thanks
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Write Company has a max capacity of 200,000 units per year. Variable manufacturing costs are $12 per unit. Fixed overhead is $600,000 per year. Variable selling and administrative costs are $5 per unit, and fixed selling and administrative costs are $300,000 per year. The current sales price is $23 per unit.
1) What is the breakeven point (a) sales unit and (b) sales dollars?
2) How many units must Write company sell to earn a profit of $240,000 per year?
3) A strike at one of the company’s major suppliers has caused a shortage of materials, so the current year’s production and sales are limited to 160,000 units. To partially offset the effect of the reduced sales on profit, management is planning to reduce fixed costs to $841,000. Variable cost per unit is the same as last year. The company has already sold 30,000 units at the regular selling price of $23 per unit.
a) What amount of fixed costs was covered by the total contributed margin of the first 30,000 units sold?
b) What contributed margin per unit will be needed on the remaining 130,000 units to cover the remaining fixed costs and to earn a profit of 210,000 this year?
[Solved] "Breakeven Analysis and Planning Future Sales"…Complete Answer! Thanks
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- Submitted On 07 Aug, 2016 09:27:32
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