Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 20,000 units at a price of $380 each. Product costs include: Direct materials $80.00 Direct labor $46.00 Variable overhead $11.00 Total fixed factory overhead $705,800 Variable selling expense is a commission of 6 percent of price; fixed selling and administrative expenses total $86,200.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Break-Even Units: Units for Target Profit
Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 20,000 units at a price of $380 each. Product costs include:
| Direct materials | $80.00 |
| Direct labor | $46.00 |
| Variable |
$11.00 |
| Total fixed factory overhead | $705,800 |
Variable selling expense is a commission of 6 percent of price; fixed selling and administrative expenses total $86,200.
Required:
![**3.** Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $398,640. Round your answer to the nearest whole number.
[Input Box] units ❌
**4. What if** the Jay-Zee Company wanted to achieve a target operating income of $385,000? Would the number of units needed increase or decrease compared to your answer in Requirement 3? Round your answer to the nearest whole number.
[Dropdown: Decrease] ✔️
Compute the number of units needed for the new target operating income.
[Input Box] units ❌](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffb9455e9-1b75-42ab-87bf-b8a6d9f2482d%2Ff072e944-67a5-443d-81b8-fe9af0004bec%2Ftdgg7no_processed.png&w=3840&q=75)
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