Question

In: Accounting

Pentucket Computer Company manufactures personal computers and tablets. Based on the latest information from the cost​...

Pentucket Computer Company manufactures personal computers and tablets. Based on the latest information from the cost​ accountant, using the current sales​ mix, the​ weighted-average sales price per unit is $ 780 and the​ weighed-average variable cost per unit is $ 624. The company does not expect the sales mix to vary for the next year. Average fixed costs per month are $76,440.

Reqirement 1. What is the number of units that must be sold each month to reach the breakeven​ point?

Start by selecting the formula and entering the amounts to compute the breakeven point in units. ​(Complete all answer boxes. Enter a​ "0" for any zero​ balances.)

(Fixed Costs) + (Target Profit) / (Contribution margin per unit) = Breakeven in units

(____________________) - (_______________________) / (_________________) = ________________

Requirement 2. If the company currently sells 910 units per​ month, what is the margin of safety in units and​ dollars?

Begin by calculating the margin of safety in units:

( Expected Sales) - (Breakeven Sales) = Margin of saftey in units

(____________________) - (_______________________) = _______________

Now calculate the margin of safety in dollars.

(Margin of saftey in units) x (Sales price per unit) = Margin of saftey in dollars

(____________________) - (_______________________) = _______________

Requirement 3.

If Pentucket Computer Company desires to make a profit of $ 20, 280 per​ month, how many units must be​ sold? ​(Complete all answer boxes. Enter a​ "0" for any zero​ balances.)

(Fixed Costs) + (Target Profit) / ( Contribution margin per unit) = Required sales in units

(____________________) - (_______________________) / (_________________) = ________________

Requirement 4.

Pentucket Computer Company thinks it can restructure some costs so that fixed costs will be reduced to $28,080 per​ month, but the​ weighted-average variable cost per unit will increase to $ 702 per unit. What is the new breakeven point in​ units? Does this increase or decrease the margin of​ safety? Why or why​ not?

Begin by calculating the new breakeven point in units. ​(Complete all answer boxes. Enter a​ "0" for any zero​ balances.)

(Fixed Costs) + (Target Profit) / (Contribution margin per unit) = Breakeven point in units

(____________________) - (_______________________) / (_________________) = ________________

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

A computer company manufactures 3 types of computers which are personal computers, workbooks and gamebooks. Each...
A computer company manufactures 3 types of computers which are personal computers, workbooks and gamebooks. Each personal computer is produced in 0.2 hours, assembled in 0.1 hours, and inspected in 0.05 hours. Each workbook is produced in 0.2 hours, assembled in 0.3 hours, and inspected in 0.075 hours. Each gamebook is produced in 0.4 hours, assembled in 0.4 hours, and inspected in 0.15 hours. At most 600 hours of production, 480 hours of assembly and 160 hours of inspection can...
Titan Computer Company manufactures a tablet computer called AllPad. The company sells these tablets through large...
Titan Computer Company manufactures a tablet computer called AllPad. The company sells these tablets through large big box retailers. This tablet computer is less expensive than similar products sold by AllPad’s competitors and has 16GB of internal storage compared to 32GB or more as offered by Pear Corporation, the leading competitor. The Titan Computer Company has recently experienced some increased production costs resulting from significant rework, whereas Pear’s reputation for quality is unmatched, and the company sells its product at...
Titan Computer Company manufactures a tablet computer called All Pad. The company sells these tablets through...
Titan Computer Company manufactures a tablet computer called All Pad. The company sells these tablets through large big box retailers. This tablet computer is less expensive than similar products sold by All Pad’s competitors and has 16GB of internal storage compared to 32GB or more as offered by Pear Corporation, the leading competitor. The Titan Computer Company has recently experienced some increased production costs resulting from significant rework, whereas Pear’s reputation for quality is unmatched, and the company sells its...
Cannington, Inc., designs, manufactures, and markets personal computers and related software. The following information was taken...
Cannington, Inc., designs, manufactures, and markets personal computers and related software. The following information was taken from a recent annual report of Cannington industries: Property, Plant, and Equipment (in millions): Current Year Preceding Year Land and buildings $518,130 $300,515 Machinery, equipment, and internal-use software 492,224 388,598 Other fixed assets related to leases 626,937 471,498 Accumulated depreciation and amortization (658,025) (549,218) a. Compute the book value of the fixed assets for the current year and the preceding year. Current year book...
PERFORMANCE EVALUATION - Economics Computer Company assembles personal computers and sells them in the retail marketplace....
PERFORMANCE EVALUATION - Economics Computer Company assembles personal computers and sells them in the retail marketplace. The company is organized into two profit centers: the assembly division and the distribution division. The demand curve facing the company (and the distribution division) is P = 3,500 – 10Q. The marginal cost for assembly (which includes purchasing the parts) is constant at $450. The distribution division faces constant marginal distribution costs of $50 per unit. A. What is the profit-maximizing retail price...
PERFORMANCE EVALUATION – Economics for Business Decisions Computer Company assembles personal computers and sells them in...
PERFORMANCE EVALUATION – Economics for Business Decisions Computer Company assembles personal computers and sells them in the retail marketplace. The company is organized into two profit centers: the assembly division and the distribution division. The demand curve facing the company (and the distribution division) is P=3,500 – 10Q. The marginal cost for assembly (which includes purchasing the parts) is constant at $450. The distribution division faces constant marginal distribution costs of $50 per unit. A. What is the profit-maximizing retail...
Horizon Corporation manufactures personal computers. The company began operations in 2016 and reported profits for the...
Horizon Corporation manufactures personal computers. The company began operations in 2016 and reported profits for the years 2016 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer to Jim Fielding, the company controller, included the following comments: If we don’t do something about the large number of unsold computers already...
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the...
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020's income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company's chief financial office (CFO) to Jim Filed, the company controller, included the following comments. If we don't do something about the large amount of unsold computers...
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the...
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer (CFO) to Jim Fielding, the company controller, included the following comments: “If we don’t do something about the large amount of unsold computers...
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the...
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer (CFO) to Jim Fielding, the company controller, included the following comments: “If we don’t do something about the large amount of unsold computers...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT