Break even Analysis and Planning Future sales
Breakeven Analysis and Planning Future sales
P9. Bar Company has a maximum capacity of 500,000 units per year. Variable manufacturing costs are $25 per unit. Fixed overhead is $900,000 per year. Variable sell- ing and administrative costs are $5 per unit, and fixed selling and administrative costs are
$300,000 per year. The current sales price is $36 per unit.
ReQUIReD
1.   What is the breakeven point in (a) sales units and (b) sales dollars?
2.    Business appliCation ▶ How many units must Bar Company sell to earn a profit of $600,000 per year?
3.    Business appliCation ▶ 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 400,000 units. To partially offset the effect of the reduced sales on profit, man- agement is planning to reduce fixed costs to $1,000,000. Variable cost per unit is the same as last year. The company has already sold 30,000 units at the regular sell- ing price of $36 per unit.
a.   What amount of fixed costs was covered by the total contribution margin of the first 30,000 units sold?
b.   What contribution margin per unit will be needed on the remaining 370,000 units to cover the remaining fixed costs and to earn a profit of $290,000 this year?
Answers
Status NEW
Posted 30 May 2017 08:05 AM
My Price 7.00
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Attachments
file 1496134830-Answer.docx preview (298 words )
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