None Cantor Products sells a product for $88. Variable costs per unit are $33, and monthly fixed costs are $187,000.Answer the following questions:Required:a. What is the break-even point in units?b. What unit sales would be required to earn a target profit of $489,500?c. Assuming Cantor achieves the level of sales required in part b, what is the degree of operating leverage?d. If sales decrease by 30% from that level, by what percentage will profits decrease?Complete this question by entering your answers in the tabs below.Required A Required BRequired CRequired D

Step 1:Answer a.Computation of the break-even point in units:Break-even point in units = Total fixed…

Answered: Cantor Products sells a product for…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...

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Similar questions

Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are $15,250. Delta Co.s tax rate is 36% and the company wants to earn $44,000 after taxes. What would be Deltas desired pre-tax income? What would be break-even point in units to reach the income goal of $44,000 after taxes? What would be break-even point in sales dollars to reach the income goal of $44000 after taxes? Create a contribution margin income statement to show that the break-even point calculated in B, generates the desired after-tax income.
Baghdad Company produces a single product. They have recently received the result of a market survey that indicates that they can increase the retail price of their product by 10% without losing customers or market share. All other costs will remain unchanged. If they enact the 10% price increase, what will be their new break-even point in units and dollars? Their most recent CVP analysis is:
Jasmine Incorporated sells a product for $61 per unit. Variable costs per unit are $31, and monthly fixed costs are $252,000. Answer the following questions: Required: a. What is the breakeven point in units? b. What unit sales would be required to earn a target profit of $162,000 ? c. Assuming Jasmine achieves the level of sales required in part b, what is the margin of safety in sales dollars?
Halifax Products sells a product for $75. Variable costs per unit are $50, and monthly fixed costs are $75,000. Answer the following questions: Required: What is the break-even point in units? What unit sales would be required to earn a target profit of $200,000? Assuming Halifax achieve the level of sales required in part b, what is the margin of safety in sales dollars?
Suppose ABC Corp’s break-even point is revenues of $1,100,000. Fixed costs are $660,000 a. Calculate the contribution margin percentage. b. Calculate the selling price if variable costs are $16 per unit. c. Suppose 75 000 units are sold. Calculate the profit earned. d. Will the company be profitable if able to sell 30,000 units? Explain. c. What should the company do to increase its profit above break-even point?
Suppose ABC Corp’s break-even point is revenues of $1,100,000. Fixed costs are $660,000. Calculate the contribution margin percentage. Calculate the selling price if variable costs are $16 per unit. Suppose 75 000 units are sold, calculate the profit earned. Willo the company beprofitable if able to sell 30,000 units? Explain. What should the company do to increase its profit above break-even point.
Assume a company is considering adding a new product. The expected cost and revenue data for this product are as follows: Annual sales 5,000 units Unit selling price $ 60 Unit variable costs: Production $ 33 Selling $ 6 Incremental fixed costs per year: Production $ 34,500 Selling $ 45,000 If the company adds the new product, it expects the contribution margin of other product lines to drop by $15,300 per year. What is the financial advantage (disadvantage) of adding the new product? Multiple Choice $40,800 $10,200 $89,700 $25,500
[The following information applies to the questions displayed below.] Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price Variable costs Fixed costs $ 12.00 per case 5.50 per case 391,950 per year Assume that the company plans to sell 75,300 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. c. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. d. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher tha projected. What impact will these cost changes have on operating profit for the year? Will profit…
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.
Assume that a firm produces an industrial product of a variable cost of $8,500 and has fixed costs of $ 25,000 per week ,currently the firms sells 20 units per week priced at $ 10625 per unit . What is the current profitability of the firm? What is the improvement to profitability if variable costs are reduced by 1 percent holding all else constant? What is the improvement to profitability if fixed costs are reduced by 1 percent ,holding all else constant ?what is the improvement to profitability if units sold are increased by 1 percent on average ,holding all else constant? What is the improvement to profitability if the price is increased by 1 percent holding all else constant? In isolation improving which aspect of the firm will have the largest positive impact on profits?

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