CollegePak Company produced and sold 60,000 backpacks during the year just ended at an average price of $20 per unit. Variable manufacturing costs were $8 per unit, and variable marketing costs were $4 per unit sold. Fixed costs amounted to $180,000 for manufacturing and $72,000 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.) Required: CollegePak`s variable manufacturing costs are expected to increase by 10 percent in the coming year. Compute the firm`s break-even point in sales dollars for the coming year. If CollegePak`s variable manufacturing costs do increase by 10 percent, compute the selling price that would yield the same contribution-margin ratio in the coming year.
CollegePak Company produced and sold 60,000 backpacks during the year just ended at an average price of $20 per unit. Variable manufacturing costs were $8 per unit, and variable marketing costs were $4 per unit sold. Fixed costs amounted to $180,000 for manufacturing and $72,000 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.) Required: CollegePak`s variable manufacturing costs are expected to increase by 10 percent in the coming year. Compute the firm`s break-even point in sales dollars for the coming year. If CollegePak`s variable manufacturing costs do increase by 10 percent, compute the selling price that would yield the same contribution-margin ratio in the coming year.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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CollegePak Company produced and sold 60,000 backpacks during the year just ended at an average price of $20 per unit. Variable
Required:
- CollegePak`s variable manufacturing costs are expected to increase by 10 percent in the coming year. Compute the firm`s break-even point in sales dollars for the coming year.
- If CollegePak`s variable manufacturing costs do increase by 10 percent, compute the selling price that would yield the same contribution-margin ratio in the coming year.
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