Auto Tires, Inc. sells tires to service stations for an average of $145 each. The variable costs of each tire is $85 and monthly fixed manufacturing costs total $45,000. Other monthly fixed costs of the company total $15,000.   Note: No need to enter comma between number   Required:   1. What is the break-even level in tires?   2. What is the margin of safety, assuming sales total $190,000?   3. What is the break-even level in tires, assuming variable costs increase by 20 percent and selling price increase by 17 per unit ?   4. What is the break-even level in tires, assuming the selling price goes up by 20 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $1500and variable cost decrease by 1 per unit ?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 4

Auto Tires, Inc. sells tires to service stations for an average of $145 each. The variable costs of each tire is $85 and monthly fixed manufacturing costs total $45,000. Other monthly fixed costs of the company total $15,000.

 

Note: No need to enter comma between number

 

Required:

 

1. What is the break-even level in tires?

 

2. What is the margin of safety, assuming sales total $190,000?

 

3. What is the break-even level in tires, assuming variable costs increase by 20 percent and selling price increase by 17 per unit ?

 

4. What is the break-even level in tires, assuming the selling price goes up by 20 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $1500and variable cost decrease by 1 per unit ?

 

 
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