Crestline Manufacturing has a factory with fixed costs of $600,000 and a production capacity of 180,000 units annually. Its product has a 25% contribution margin. The target profit is $400,000. At full production, what does the selling price per unit need to be? Show your complete solution.

Crestline Manufacturing has a factory with fixed costs of $600,000 and a production capacity of 180,000 units annually. Its product has a 25% contribution margin. The target profit is $400,000. At full production, what does the selling price per unit need to be? Show your complete solution.

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 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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What does the selling price per unit need to be? Please provide solution this general accounting question

Crestline Manufacturing has a factory with fixed costs of $600,000
and a production capacity of 180,000 units annually. Its product has
a 25% contribution margin. The target profit is $400,000. At full
production, what does the selling price per unit need to be? Show
your complete solution.

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Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
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