A certain company sells its only product for $10 per unit. The variable costs to produce...

A certain company sells its only product for $10 per unit. The variable costs to produce the product are $3 per unit and it costs approximately $1 per unit for selling and administrative costs. The fixed costs of production are $400,000 per period and the fixed selling and administrative costs are $200,000 per year. The company is subject to a 20 percent tax rate.

Answer the following questions.

What is the breakeven point in units?

What is the breakeven point in dollars?

How many units must be sold to earn a profit of $72,000 before tax?

How many units must be sold to earn a profit of $72,000 after tax?

If the variable costs increase 10 percent, what increase is necessary in selling price to maintain the same breakeven point in units?

If the fixed costs increase, what is the effect on breakeven? On contribution margin per unit? If the tax rate increases, what is the effect on breakeven? On contribution margin per unit?

Expert Solution

ekkarill92 answered 1 year ago

Quiz Company sells its product for $10 per unit. Variable costs are $6 per unit and...

Quiz Company sells its product for $10 per unit. Variable costs are $6 per unit and fixed costs are $15,000 per week. During the third week of July, Quiz Company sold 5,000 units. 1. Determine the number of units Quiz Company must sell to earn operating income of $8,000. 2. Determine the sales revenue (in dollars) Quiz Company must generate to break even. 3. Determine the sales revenue (in dollars) Quiz Company must generate to earn operating income of $8,000....

A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are...

A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are $6 and total fixed costs are $12,000. At this selling price, the company earns a profit equal to 10% of total dollar sales. By reducing its selling price to $9 per unit, the manufacturer can increase its unit sales volume by 25%. Assume that there are no taxes and that total fixed costs and variable costs per unit remain unchanged. If the selling price...

Company sells its product for $11700 per unit. Variable costs per unit are: manufacturing, $5500; and...

Company sells its product for $11700 per unit. Variable costs per unit are: manufacturing, $5500; and selling and administrative, $135. Fixed costs are: $30000 manufacturing overhead, and $40000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 20 units per year in 2018–2020. Sales were 20 units in 2018, 16 units in 2019, and 24 units in 2020. Income under variable costing for 2019 is $27040. $33040. $35200. $60080.

Warner Ltd sells its only product at a price of $200 per unit. Variable costs are...

Warner Ltd sells its only product at a price of $200 per unit. Variable costs are $160 per unit and total fixed costs are $208 000. Current annual sales are 6500 units. A. What is the company’s break-even point in sales units? , What is the break-even point in sales dollars? B. What is the company’s margin of safety? C. Calculate the company’s profit under the following situations. Treat each case as independent of the others. 1. Variable costs increase...

11 Green Company sells its product for $11100 per unit. Variable costs per unit are: manufacturing,...

11 Green Company sells its product for $11100 per unit. Variable costs per unit are: manufacturing, $5600; and selling and administrative, $125. Fixed costs are: $51000 manufacturing overhead, and $61000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 34 units per year in 2018–2020. Sales were 34 units in 2018, 30 units in 2019, and 38 units in 2020. Income under absorption costing for 2020 is $79650. $85250. $86250. $92250.

Chandler Company sells its product for $104 per unit. Variable manufacturing costs per unit are $45,...

Chandler Company sells its product for $104 per unit. Variable manufacturing costs per unit are $45, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $15 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or using absorption costing? Calculate...

Sierra Company incurs the following costs to produce and sell its only product. Variable costs per...

Sierra Company incurs the following costs to produce and sell its only product. Variable costs per unit: Direct materials $ 10 Direct labor $ 9 Variable manufacturing overhead $ 3 Variable selling and administrative expenses $ 5 Fixed costs per year: Fixed manufacturing overhead $ 88,500 Fixed selling and administrative expenses $ 305,000 During this year, 29,500 units were produced and 25,500 units were sold. The Finished Goods inventory account at the end of this year shows a balance of...

Our company sells a product for $150 per unit. Variable costs are $90 per unit and...

Our company sells a product for $150 per unit. Variable costs are $90 per unit and fixed costs are $18,000. The company expects to sell 800 units this year. How many units must we sell to break even? a) 300 b) 320 c) 360 d) 400 Our company has reviewed the utilities bills for our company. We have determined that the highest and lowest bills were $5,600 and $3,200 for the months of January and September. If we produced 1,200...

- XYZ Company sells its only product for $40 per unit. Its total fixed costs are...

- XYZ Company sells its only product for $40 per unit. Its total fixed costs are $180,000 per annum. Its CM ratio is 20%. XYZ plans to sell 16,000 units this year. Required: 1. Calculate CM per unit and the variable cost per unit. 2. Calculate break-even point in unit sales and in dollar sales? 3. Calculate the unit sales and dollar sales required to achieve a target profit of $60,000 per year? 4. Assume that the company is able...

Variable and Absorption Costing Chandler Company sells its product for $106 per unit. Variable manufacturing costs...

Variable and Absorption Costing Chandler Company sells its product for $106 per unit. Variable manufacturing costs per unit are $47, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $18 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory in 2016. During 2016, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company in 2016 be higher if calculated using variable costing or...

Question