Maurice Tutor

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Category > Management Posted 08 Oct 2017 My Price 6.00

Kallard Manufacturing Company

Problem 4-41  Break-Even Units, Operating Income, Margin of Safety

Kallard Manufacturing Company produces t-shirts screen-printed with the logos of various sports teams. Each shirt is priced at $13.50 and has a unit variable cost of $9.85. Total fixed cost is $197,600.

Required:

1.       Compute the break-even point in units. (Note: Round answer to the nearest whole unit.)

2.       Suppose that Kallard could reduce its fixed costs by $23,500 by reducing the amount of setup and engineering time needed. How many units must be sold to break even in this case? (Note: Round answer to the nearest whole unit.)

3.       CONCEPTUAL CONNECTION How does the reduction in fixed cost affect the break-even point? Operating income? The margin of safety?

 

Answers

Maurice Tutor
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Status NEW Posted 08 Oct 2017 01:10 PM My Price 6.00

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