FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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:

  1. What are the variable expenses per unit?

 

 

  1. Use the equation method for the following:

 

  1. What is the break-even point in units and in sales dollars?

 

 

  1. What sales level in units and in sales dollars is required to earn an annual profit of $108,000?

 

 

  1. What sales level in units is required to earn an annual after-tax profit of $108,000 if the tax rate is 20%?

 

 

  1. 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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