Question
In: Accounting
1. Ozark Outdoors is a manufacturer of outdoor items. The company is considering the possibility of...
1. Ozark Outdoors is a manufacturer of outdoor items. The company is considering the possibility of offering a new sleeping bag that would sell for $125 each. Cost to manufacture these sleeping bags includes $35 in materials and $25 in direct labor for each sleeping bag. Variable manufacturing cost is $15. In order to manufacture these sleeping bags, the company would need to incur $120,000 in fixed costs for new equipment.
Required:
- Compute the unit contribution margin.
- Compute the break-even point of the sleeping bag in units sold.
- What would be the total revenue at the break-even point?
- How many units would Ozark need to sell to earn a profit of $21,000?
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ekkarill92 answered 5 months agoRelated Solutions
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale
distribution of consumer products in the Ozark Mountain regions.
The following disclosure note appeared in the company’s 2018 annual
report:
Note 5. Convertible Preferred Stock (in part):
The Company has the following Convertible Preferred Stock
outstanding as of September 2018:
Date of issuance:
June
17, 2015
Optionally redeemable beginning:
June
18, 2017
Par value (gross proceeds):
$
6,900,000
Number of shares:
230,000
Liquidation preference per share:
$
30
Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale
distribution of consumer products in the Ozark Mountain regions.
The following disclosure note appeared in the company’s 2021 annual
report:
Note 5. Convertible Preferred Stock (in part):
The Company has the following Convertible Preferred Stock
outstanding as of September 2021:
Date of issuance:
June
17, 2018
Optionally redeemable beginning:
June
18, 2020
Par value (gross proceeds):
$
3,750,000
Number of shares:
150,000
Liquidation preference per share:
$
25
Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale
distribution of consumer products in the Ozark Mountain regions.
The following disclosure note appeared in the company’s 2021 annual
report:
Note 5. Convertible Preferred Stock (in part):
The Company has the following Convertible Preferred Stock
outstanding as of September 2021:
Date of issuance:
June
17, 2018
Optionally redeemable beginning:
June
18, 2020
Par value (gross proceeds):
$
2,800,000
Number of shares:
140,000
Liquidation preference per share:
$
20
Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale
distribution of consumer products in the Ozark Mountain regions.
The following disclosure note appeared in the company’s 2018 annual
report: Note 5. Convertible Preferred Stock (in part): The Company
has the following Convertible Preferred Stock outstanding as of
September 2018: Date of issuance: June 17, 2015 Optionally
redeemable beginning: June 18, 2017 Par value (gross proceeds): $
2,800,000 Number of shares: 140,000 Liquidation preference per
share: $ 20 Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale
distribution of consumer products in the Ozark Mountain regions.
The following disclosure note appeared in the company’s 2021 annual
report:
Note 5. Convertible Preferred Stock (in part):
The Company has the following Convertible Preferred Stock
outstanding as of September 2021:
Date of issuance:
June
17, 2018
Optionally redeemable beginning:
June
18, 2020
Par value (gross proceeds):
$
6,000,000
Number of shares:
240,000
Liquidation preference per share:
$
25
Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2018 annual report: Note 5. Convertible Preferred Stock (in part): The Company has the following Convertible Preferred Stock outstanding as of September 2018: Date of issuance: June 17, 2015 Optionally redeemable beginning: June 18, 2017 Par value (gross proceeds): $ 2,500,000 Number of shares: 100,000 Liquidation preference per share: $ 25.00 Conversion price per...
1. Choo Choo Inc. is a manufacturer of model trains. The company is considering the...
1. Choo
Choo Inc. is a manufacturer of model trains. The company is
considering the purchase of an industrial 3D printer, which will
allow the firm to produce custom-made model trains for its high-end
customers. The printer will cost $2,500,000, and it is expected to
produce net cash flows of $600,000 per year for the next six years.
Liquidation of the equipment will net the firm $350,000 in cash at
the end of six years. The firm requires a...
1. Choo Choo Inc. is a manufacturer of model trains. The company is considering the...
1. Choo
Choo Inc. is a manufacturer of model trains. The company is
considering the purchase of an industrial 3D printer, which will
allow the firm to produce custom-made model trains for its high-end
customers. The printer will cost $1,000,000, and it is expected to
produce net cash flows of $350,000 per year for the next six years.
Liquidation of the equipment will net the firm $100,000 in cash at
the end of six years. The firm requires a...
A company is considering the possibility of acquiring new manufacturing unit for $6,000,000 cash. The scrap...
A company is considering the possibility of acquiring new
manufacturing unit for $6,000,000 cash. The scrap value is
estimated to be $500,000 at the end of the 10-year life of the
equipment. The firm could lease the equipment for $1,000,000 per
year, payable at the start of each year. The equipment will be
returned to the lessor at the expiry of the lease. If the firm can
earn 15% pa on its capital, advise whether it should buy or
lease.
A company is considering the possibility of acquiring new manufacturing unit for $6,000,000 cash. The scrap...
A company is considering the possibility of acquiring new
manufacturing unit for $6,000,000 cash. The scrap value is
estimated to be $500,000 at the end of the 10-year life of the
equipment. The firm could lease the equipment for $1,000,000 per
year, payable at the start of each year. The equipment will be
returned to the lessor at the expiry of the lease. If the firm can
earn 15% pa on its capital, advise whether it should buy or
lease.
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