A product sells for $50 with variable costs of $36 per unit and annual fixed costs of $1,200,000. If the company wants to earn an operating income equal to 20% of sales, how many units must be sold (Assume all units produced are sold)?

A product sells for $50 with variable costs of $36 per unit and annual fixed costs of $1,200,000. If the company wants to earn an operating income equal to 20% of sales, how many units must be sold (Assume all units produced are sold)?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A company invests $16,000 to produce a product that will sell for $45.60. Each unit costs $8.35 to…

A: Investment cost = $ 16,000 Selling price = $ 45.60 Cost per unit = $ 8.35 Profit per unit = Selling…

Q: A company has $50 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is…

A: Price = Total cost + Mark up on cost

Q: If the unit selling price is P16, the unit variable cost is P12, and fixed costs are P160,000, how…

A: The question is related to Cost Volume Profit Analysis. The Basic Sales equation is as under Sales…

Q: Suppose a company has 3 products. Product A has a contribution margin per unit of $15, product B has…

A: Equation to determine the number of units of each product that the company must sell to achieve a…

Q: A company requires $1305600 in sales to meet its operating income target. Its contribution margin is…

A: Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Q: Spice Inc.'s unit selling price is $51, the unit variable costs are $38, fixed costs are $102,000,…

A: Formula: Contribution margin = Selling price - variable cost

Q: elling price is $137.56. The fixed cost associated with the 0,557 per year. The company has an…

A: First, let's calculate the contribution margin per unit:Contribution Margin per unit = Selling price…

Q: Kareem Co. produces a single product that is sold for $85 per unit. If the variable costs per unit…

A: CVP analysis is considered a decision-making tool that helps management to make strategies and take…

Q: Spice Inc.'s unit selling price is $51. the unit variable costs are $38, fixed costs are $102.000,…

A: Operating income involves the income generated by normal business transactions. This means that the…

Q: Suppose the demand of a product produced by a production firm is 8000 per year (1 year = 312 days)…

A: Annual demand, D = 8000 Production rate, P = 10000 per year Setup cost, S = 600 Unit carrying cost,…

Q: Apex Company sells a product for $220 per unit. The variable cost is $170 per unit, and fixed costs…

A: The Break-even point is the point where the company does not earn profit nor does it incur a loss in…

Q: Lindon Company is the exclusive distributor for an automotive product that sells for $54.00 per unit…

A: Breakeven is the point at which an entity is neither earning nor losing anything. At this point, an…

Q: A company desires to sell a sufficient quantity of products to earn a profit of $300,000. If the…

A: Definition of Variable cost:Variable cost refers to expenses that fluctuate directly with production…

Q: Lindon Company is the exclusive distributor for an automotive product that sells for $32.00 per unit…

A: The break-even sales are calculated as the fixed costs divided by the contribution margin ratio. The…

Q: Willie Company sells 28,000 units at $36 per unit. Variable costs are $20.16 per unit, and fixed…

A: The Break-even point is that level of sales, where the total cost i.e variable and fixed both are…

Q: Jasin Company projected operating income ( based on sales of 450,000 units ) for the coming year as…

A: The break even sales are the sales where business earns no profit no loss during the period. Break…

Q: ummer Company sells a product with a contribution margin ratio of 54%. Fixed costs per month are…

A: The break-even sales are the sales where the business earns no profit or loss during the period. The…

Q: Spice Inc.'s unit selling price is $51, the unit variable costs are $38, fixed costs are $102,000,…

A: Formula: Contribution margin = selling price - variable cost Deduction of variable cost from selling…

Q: Products?

A: Hello student! Break-Even Point (BEP) is the amount of sales in dollars or units where there is no…

Q: Frank Corporation manufactures a single product that has a selling price of S30.00 per unit. Fixed…

A: Formula used: Units to be sold to earn a target profit = ( Fixed cost + target profit ) / Unit…

Q: pany manufactures and sells a single product. Following data were given: 600,000.00 420,000.00 Sales…

A: Break Even Point is a situation for a manufacturing entity where the total revenues in a period are…

Q: Marsh Motors sells 5,000 motors a year for $30 apiece. Variable costs are $8 per unit, and total…

A: The break even sales units are the sales where business earns no profit no loss during the year.

Q: A company faces fixed costs of $100,000 and variable costs of $8.00/unit. They plan to directly sell…

A: Break-even point :— It is the point of production where total cost is equal to total revenue. At…

Q: Klamath Company produces a single product. The projected income statement for the coming year is as…

A: Income statement: The income statement shows the company's revenues and expenses earned during the…

Q: Skyler Company sells a product for $125 per unit. The variable cost is $85 per unit, and fixed costs…

A: BREAKEVEN POINTBreak Even means the volume of production or sales where there is no profit or…

Q: (1) A company sells its products for $50 per unit. It has annual fixed cost of $300,000 and variable…

A: The contribution margin per unit is calculated by subtracting the variable cost per unit from the…

Q: A company's fixed operating costs are $740,000, its variable costs are $2.25 per unit, and the…

A: Paticulars Amount Sales price per unit 4.65 Less Variable Expenses per unit…

Q: The Titan Company provides you with the following information for the current year: Revenues =…

A: It is given that cost of goods sold = $750,000 2/3rd of the above is variable , variable cost =…

Q: The following annual information is for Dexter Corporation: Product A Revenue per unit: $20.00…

A: Formula: Unit contribution margin = Selling price - Variable cost per unit

Q: mpany pr

A: the month, after that deducting the fixed cost (per moth get net income or loss for the month.) As…

Q: Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed…

A: Break-even point in units is computed by dividing the fixed cost by the contribution margin per…

Q: A company can generate a maximum sales of 825,000 a year. The variable cost ratio to sales is 55%…

A: Variable cost ratio = 55% So. Contribution margin ratio = 45% Desired sales = (128,430 + 168,570)…

Q: Lindon Company is the exclusive distributor for an automotive product selling for $22.00 per unit…

A: Contribution Margin (CM): This concept represents the portion of sales revenue available to cover…

Q: A company has monthly fixed costs of $135,000. The variable costs are $5 per unit. If the sales…

A: Fixed cost is the cost that doesn't change with the change in the level of production. It's a period…

Q: Rothe Company manufactures and sells a single product that it sells for $90 per unit and has a…

A: Net operating income is the amount of money earned from the operations of an entity. It is an amount…

Q: C Corporation sells its product for $12 per unit. Next year, fixed expenses are expected to be…

A: Analysis of the target profit helps a company to determine the level of dollar sales required to…

Q: A certain factory produces 2000 Ton per year of its product. Th price of one kilogram is 1.8$. The…

A: With an increase in the price of per unit of product, the net profit increase proportionately.

Q: An annual fixed operating cost of P10,000,000 is incurred by a Auto Devices Manufacturing Company.…

A: A Break-even point is a point when the total sales are equal to its total cost. It is a point that…

Q: A CERTAIN PRODUCT SELLS FOR $55. IT HAS VARIABLE COSTS OF $33 PER UNIT AND FIXED COSTS OF $300,000…

A: The breakeven point is where a business neither makes a profit nor incurs a loss. It is the level of…

Q: A company has $25 per unit selling price, $7.00 per unit in variable production cost and $2.00 per…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 Working Note

VIEW

Step 3 Working Note

VIEW

Step 4 Final Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

A product sells for $30 per unit and has variable costs of $20 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease by 18%, if fixed costs increase to $900,000, and the selling price increases by 25%, what would be the breakeven point in units?
Halifax Products sells a product for $118. Variable costs per unit are $67, and monthly fixed costs are $168,300. a. What is the break-even point in units? Break-Even Point units b. How many units would need to be sold to earn a target profit of $102,000? Total Required Sales units c. Assuming they achieve the level of sales required in part b, what is the margin of safety in sales dollars? Margin of Safety
A company has set its initial selling price at $28 per unit. Its variable manufacturing costs are $10 per unit produced. Its variable selling and administrative costs are $2 per unit sold. The company’s fixed manufacturing costs are $300,000 per period and its fixed selling and administrative costs are $150,000 per period. The company’s target profit is $200,000 per period. What is the breakeven point in units? What is the breakeven point in dollars? How many units must be sold to achieve the target profit? If the fixed costs increase by 20%, how many units must be sold to achieve the target profit?
Company produces three products with the following information: Selling price per unit Variable cost per unit Machine-hours per unit (MH/unit) Small $17 $8 2 Q) What is the maximum monthly rent the " optimal use of their own machine)? A) $ Product Medium $19 $10 3 Large $26 $12 4 The company has a limit of 14,300 machine-hours available per month and a monthly fixed cost of $11,000. The demand for each of the products is 2,500 units per month. The company's goal is to maximize its profitability. Suppose the Company can rent a machine that will provide an additional 1,360 machine-hours per month. company should be willing to pay for this machine (assuming they've made
s
A manufacturer of ovens sells them for $1,370.00 each. The variable costs are $1,020.00 per unit. The manufacturer's factory has annual fixed costs of $2,460,000.00. Given the expected sales volume of 3,700 units for this year, what will be this year's net income? Round to two decimal places
Lindon Company is the exclusive distributor for an automotive product that sells for $50.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $345,000 per year. The company plans to sell 27,200 units this year. Required: What are the variable expenses per unit? Note: Round your "per unit" answer to 2 decimal places. What is the break-even point in unit sales and in dollar sales? What amount of unit sales and dollar sales is required to attain a target profit of $195,000 per year? Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.00 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $195,000?
A company produces and sells a product. The unit variable cost is $42.44 and the unit selling price is $88.20. The fixed cost associated with the product is $149,856 per year. The company has an income tax rate of 25.19 percent. The company must produce and sell units per year in order to reach breakeven.
The Blue Co. will produce 25,000 units of product next year. Variable costs ratio is 70%, while fixed costs will total P85,000. The price of each unit to be sold by the firm to achieve an EBIT of P60,000 is *
Assume total fixed costs of $160,000, variable costs per unit of $6, and contribution margin per unit of $4. How many units must be sold to meet a target net income of $50,000, assuming a tax rate of 20%?
Lindon Company is the exclusive distributor for an automotive product. The product sells $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. Required: 1. What are the variable expenses per unit? 2. Using the equation method: a. What is the break-even point in units and sales dollars? b. What sales level in units and in sales dollars is required to earn an annual profit of $60,000? c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the Company's new break-even point in units and in sales dollars? 3. Repeat (2) above using the unit contribution method.