Trimble Company sells an electronic toy for $40. The variable cost is $24 per unit and...

Trimble Company sells an electronic toy for $40. The variable cost is $24 per unit and the fixed cost is $32,000 per year. Management is considering the following changes:

Alternative #1 Lease a new packaging machine for $4,000 per year, which will reduce variable cost by $1 per unit.

Alternative #2 Increase selling price 10 percent to counteract an expected 25 percent increase in fixed cost.

Alternative #3 Reduce fixed costs by 25 percent by moving to a lower rent location. This would have the effect of increasing variable costs by 10 percent.

Required:

Consider and answer each of the following questions independently: Round calculations to the nearest unit

(a) Determine the current break-even point in units and dollars.

(b) Determine the expected profit assuming alternative #1 and sales of 3,200 units.

(c) Determine the break-even point in units and dollars assuming alternative #2.

(d) Determine the break-even point required in units and dollars assuming alternative #3.

(e) Determine the volume of sales required to earn $23,600 assuming alternative #3.

Please only attempt if you can solve the question with a proper explanation. Please do not copy from Chegg.

Expert Solution

ekkarill92 answered 2 years ago

A company sells clocks for $40 each. Its variable cost per unit is $32, and its...

A company sells clocks for $40 each. Its variable cost per unit is $32, and its fixed cost per year is $20,000. 1. If it sells 12,500 clocks this year, what is its contribution margin? 2. If it sells 12,500 clocks this year, what is its operating income? 3. If it sells 12,500 clocks this year, what is its operating leverage? 4. If it sells 12,500 clocks this year, what would be the percentage change in its operating income if...

Sauer Company sells folding chairs for $40.00 per unit. Variable cost is $15.00 per unit. Each...

Sauer Company sells folding chairs for $40.00 per unit. Variable cost is $15.00 per unit. Each chair requires 4 direct labor hours and 2 machine hours to produce. Which of the following is the correct contribution margin per machine hour? $12.50 $0.08 None of these $0.10 e. $6.25 Archer Company uses a job order cost system. During the month of September, the company worked on Job B. The information contained on the cost sheet is as follows: Job...

Stratford Company distributes a lightweight lawn chair that sells for $40 per unit. Variable expenses are...

Stratford Company distributes a lightweight lawn chair that sells for $40 per unit. Variable expenses are $10 per unit, and fixed expenses total $768,000 annually. Required: Answer the following independent questions: 1. What is the product’s CM ratio? 2. Use the CM ratio to determine the break-even point in sales dollars. 3. The company estimates that sales will increase by $65,000 during the coming year due to increased demand. By how much should net operating income increase?...

Towing Company manufactures and sells a single product for $40 per unit. Variable costs are $30...

Towing Company manufactures and sells a single product for $40 per unit. Variable costs are $30 per unit and fixed costs total $168,000. During 2019, the company sold 26,500 units of this product to customers. In order to improve profitability, the president of Towing Company believes the following changes should be made in 2020: 1. decrease the selling price of the product by 10% 2. automate a portion of the production process which will reduce variable costs by 5% per...

4 Woodsman Company sells a product for $220 per unit. The variable cost is $120 per...

4 Woodsman Company sells a product for $220 per unit. The variable cost is $120 per unit, and fixed costs are $520,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $202,800. a. Break-even point in sales units units b. Break-even point in sales units if the company desires a target profit of $202,800 units

1. A company has fixed cost of $45,000, variable cost per unit of $11, and sells...

1. A company has fixed cost of $45,000, variable cost per unit of $11, and sells its product at $18 each. a) What quantity must the firm sell in order to break-even? Explain how you reached this conclusion. b) What is the firm's total revenue at the break-even level of output? Show your calculation. c) What is the firm's total variable cost at the break-even level of output? d) What quantity must the firm sell in order to make a...

Given the following Selling Price: 50$ per unit Variable Cost: 40$ per unit Fixed Cost: 80,000$...

Given the following Selling Price: 50$ per unit Variable Cost: 40$ per unit Fixed Cost: 80,000$ per unit Calculate: A. Contribution margin as well as the contribution margin ratio B. Profit(loss) if 7,200 units are sold C. Margin of safety if 10,100 units are sold D. Break even point in dollars

A firm’s product sells for $12 per unit and the unit variable cost is $8. The...

A firm’s product sells for $12 per unit and the unit variable cost is $8. The operating fixed costs total $100,000 per year. The firm pays $20,000 interest and $3,000 preferred dividends each year. The tax rate = 40%. 1. What is the firm’s operating breakeven point (rounded to the whole unit)? 2. What is the DFL at 50,000 units per year (rounded to the first decimal place)? 3. What is the DOL at 50,000 units per year (rounded to...

Product A sells for $24.00 per unit and its variable cost is $20.00 per unit. Product...

Product A sells for $24.00 per unit and its variable cost is $20.00 per unit. Product B sells for $30.00 per unit and its variable cost is $22.80 per unit. Both products use the same machines. A total of 204,000 machine hours are available each year. Product A requires 1.0 machine hour (MH) while Product B requires 1.5 MHs. The market demand for Product A is 100,000 units and the market demand for Product B is 70,000 units. The company...

Question #7: The Trojan Company sells a product for $120 per unit. The variable cost is...

Question #7: The Trojan Company sells a product for $120 per unit. The variable cost is $40 per unit, and fixed costs are $270,000. Determine the (a) break-even point in sales units, and (b) break-even points in sales units if the company desires a target profit of $36,000. Question #8: Active Kids manufactures Children’s bicycles. It has fixed costs of $5,360,000. Active Kid’s sales mix and contribution margin per unit are shown as follows: Sales Mix Contribution Margin Basic ...

Question