Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 14 Aug 2017 My Price 7.00

Super Sales Company

EXERCISE 5–16 Break-Even and Target Profit Analysis [LO3, LO4, LO5, LO6]

Super Sales Company is the exclusive distributor for a revolutionary bookbag. The product sells for $60 per unit and has a CM ratio of 40%. The company’s fixed expenses are $360,000 per year. The company plans to sell 17,000 bookbags this year.

Required:

1.       What are the variable expenses per unit?

2.       Using the equation method:

a.       What is the break-even point in units and in sales dollars?

b.       What sales level in units and in sales dollars is required to earn an annual profit of

$90,000?

c.        Assume that through negotiation with the manufacturer the Super Sales Company is able to reduce its variable expenses by $3 per unit. What is the company’s new break-even point in units and in sales dollars?

3.       Repeat (2) above using the formula method.

Answers

(5)
Status NEW Posted 14 Aug 2017 08:08 PM My Price 7.00

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