Question

1) Cyber Security Systems had sales of 3,600 units at $70 per unit last year. The marketing manager projects a 30 percent increase in unit volume sales this year with a 20 percent price increase. Returned merchandise will represent 10 percent of total sales.

What is your net dollar sales projection for this year?

2) The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez’s autograph stamped on them. Each bat sells for $37 and has a variable cost of $20. There are $31,450 in fixed costs involved in the production process.

a. Compute the break-even point in units.
b. Find the sales (in units) needed to earn a profit of $15,555.
  

Answer 1

1)	Particulars	Price per Unit	Units	Amount
	Sales	$                    70	3,600	$       252,000
	Projected Sales	$                    84	4,680	$       393,120
		($ 70 * 120%)	(3,600 * 130%)

Given, Returned Sales = 10% of Total Sales

Returned Sales = 10% of $ 393,120 = $ 39,312

Sales	$         393,120
Less: Sales Returns	$            39,312
Net Dollar Sales	$         353,808

2)	Particulars	Amount
	A. Sale Price Per bat	$            37
	B. Less: Variable Costs	$            20
	C. Contribution per Bat (A-B)	$            17
	Fixed Costs in Production Process	$    31,450
a.	Break Even Point = Fixed Cost/Contribution per Unit
	Break Even Point = $ 31,450/ $ 17
	Monthly Break Even Point(in Units) =1850 Bats
b.	Expected Profit	$15,555
	Required Contribution = Fixed Cost + Expected Profit
	Required Contribution = $ 31,450 + $ 15,555
	Required Contribution = $ 47,005
	Required Sales = Required Contribution/ Contribution per Unit
	Required Sales = $ 47,005 / $ 17
	Required Sales = 2,765 Units