Question
In: Accounting
Cahill Company is considering adding a new product. The cost accountant has provided the following data:...
Cahill Company is considering adding a new product. The cost accountant has provided the following data:
| Expected variable cost of manufacturing | $ | 57 | per unit |
| Expected annual fixed manufacturing costs | $ | 216,000 | |
The administrative vice president has provided the following estimates:
| Expected sales commission | $ | 3 | per unit |
| Expected annual fixed administrative costs | $ | 104,000 | |
The manager has decided that any new product must at least break even in the first year.
Required
Use the equation method and consider each requirement separately.
a. If the sales price is set at $110, how many units must Cahill sell to break even?
b. Cahill estimates that sales will probably be 8,000 units. What sales price per unit will allow the company to break even?
c. Cahill has decided to advertise the product heavily and has set the sales price at $115. If sales are 7,200 units, how much can the company spend on advertising and still break even?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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The administrative vice president has provided the
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Expected annual fixed
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Expected annual fixed
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Expected annual fixed
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The administrative vice president has provided the following
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Expected sales commission
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Expected annual fixed
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