FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $60 per unit and has a CM ratio of 40%. The company’s fixed expenses are $540,000 per year. The company plans to sell 26,000 knapsacks this year.
Required:
- What are the variable expenses per unit?
- Use the equation method for the following:
- What is the break-even point in units and in sales dollars?
- What sales level in units and in sales dollars is required to earn an annual profit of $108,000?
- What sales level in units is required to earn an annual after-tax profit of $108,000 if the tax rate is 20%?
- Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $3 per unit. What is the company’s new break-even point in units and in sales dollars? (Do not round intermediate calculations. Round your final answers to the nearest whole number.)
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