None The following information of a company is available for the year 2006: Sales 40,000 Rawmaterials 20,000 Direct wages 6,000 Variable and fixed OH 10,000 Profit 4,000 Units sold 200Nos. In the year 2007, wages rate will increase by 50% and fixed cost will decrease by `600. If 300units are sold in 2007, the total fixed and variable O/H will be 11,400. How many units should besold in 2007, so that the same amount of profit per unit as in year 2006 may be earned?

Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…

Answered: The following information of a company…

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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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?
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