Question

In: Accounting

Xi-Tech, Inc. is considering the introduction of a new music player with the following price and...

Xi-Tech, Inc. is considering the introduction of a new music player with the following price and cost characteristics: Sales price $ 125 each Variable costs 75 each Fixed costs 180,000 per year Tax Rate 25% Required: (show your work) • How many units and sales dollars must Xi-Tech sell to break even? • How many units and sales dollars must Xi-Tech sell to make an and after-tax profit of $120,000 for the year? • Prove your answer in part b by preparing a Contribution Margin Income Statement all the way through to after-tax profit.

Solutions

Expert Solution


Related Solutions

Derby Phones is considering the introduction of a new model of headphones with the following price...
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics: Sales price $ 23 per unit Variable costs 6 per unit Fixed costs 24,000 per month Assume that the projected number of units sold for the month is 7,000. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by...
Derby Phones is considering the introduction of a new model of headphones with the following price...
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics: Sales price $ 19 per unit Variable costs 7 per unit Fixed costs 30,000 per month Assume that the projected number of units sold for the month is 6,000. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by...
Derby Phones is considering the introduction of a new model of headphones with the following price...
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics: Sales price $ 355 per unit Variable costs 140 per unit Fixed costs 451,500 per month Required: a. What number must Derby sell per month to break even? Break even sales in units b. What number must Derby sell to make an operating profit of $279,500 for the month? Number of units sold
Derby Phones is considering the introduction of a new model of headphones with the following price...
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics: Sales price $ 17 per unit Variable costs 8 per unit Fixed costs 20,000 per month Assume that the projected number of units sold for the month is 6,500. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by...
Derby Phones is considering the introduction of a new model of headphones with the following price...
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price $ 21 per unit Variable costs 9 per unit Fixed costs 26,000 per month Assume that the projected number of units sold for the month is 6,000. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by...
Martin Company is considering the introduction of a new product. To determine a selling price, the...
Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 19,000 Unit product cost $ 50 Projected annual selling and administrative expenses $ 72,000 Estimated investment required by the company $ 340,000 Desired return on investment (ROI) 19 % The company uses the absorption costing approach to cost-plus pricing. Required: 1. Compute the markup required to achieve the...
1. Derby Phones is considering the introduction of a new model of headphones with the following...
1. Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics: Sales price $ 19 per unit Variable costs 6 per unit Fixed costs 20,000 per month Assume that the projected number of units sold for the month is 6,000. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases...
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics:
  Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics:         Sales price $ 16 per unit Variable costs   4 per unit Fixed costs   48,000 per month   2. value:1.00 points Required information Required: a. What number must Warner sell per month to break even? b. What number must Warner sell per month to make an operating profit...
Larry Inc. is considering the acquisition of a new piece of equipment. The machine’s price is...
Larry Inc. is considering the acquisition of a new piece of equipment. The machine’s price is $600,000. In addition, installation and transportation costs would be $50,000 and would require $10,000 in spare parts thus increasing the firm’s networking capital by that amount. The system falls into the MACRS 3-year class (depreciation rates of 33%, 45%, 15%, and 7%). The current machine it would replace could be sold for $50,000 and currently has no book value. It is estimated that the...
Henry’s Inc. is considering the acquisition of a new piece of equipment. The machine’s price is...
Henry’s Inc. is considering the acquisition of a new piece of equipment. The machine’s price is $600,000. In addition, installation and transportation costs would be $50,000 and would require $10,000 in spare parts thus increasing the firm’s net working capital by that amount. The system falls into the MACRS 3-year class (depreciation rates of 33%, 45%, 15%, and 7%). The current machine it would replace could be sold for $50,000 and currently has no book value. It is estimated that...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT