P5-9 Bar
Company has a maximum capacity of 500,000 units per year. Variable manufacturing
costs are $25 per unit. Fixed overhead is $900,000 per year. Variable selling
and administrative costs are $5 per unit, and fixed selling and administrative
costs are $300,000 per year. The current sales price is $36 per unit.
Required
1. What is the breakeven point in
(a) Sales units
(b) Sales dollars?
b. What contribution margin per unit will be needed on the remaining 370,000 units to cover the remaining fixed costs and to earn a profit of $290,000 this year?
File name: P5-9 Bar Companyy.xls File type: .xls PRICE: $15
1. What is the breakeven point in
(a) Sales units
(b) Sales dollars?
2. How
many units must Bar Company sell to earn a profit of $600,000 per year?
3. A strike at one of the company’s major
suppliers has caused a shortage of materials, so the current year’s
production and sales are limited to 400,000 units. To partially offset the
effect of the reduced sales on profit, management is planning to reduce fixed
costs to $1,000,000. Variable cost per unit is the same as last year. The
company has already sold 30,000 units at the regular selling price of $36 per
unit.
a. What
amount of fixed costs was covered by the total contribution margin of the first
30,000 units sold?b. What contribution margin per unit will be needed on the remaining 370,000 units to cover the remaining fixed costs and to earn a profit of $290,000 this year?
TUTORIAL PREVIEW
Breakeven Analysis and Planning Future Sales
|
1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
BE Units
|
|
=
|
|
FC
|
|
/
|
|
|
CM per Unit
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
=
|
|
$1,200,000
|
|
/
|
|
|
$6
|
|
|
|
|
|
|
|
