Guthrie Industries manufactures and sells dog collars. The collars sell for $12 each. Information about the company’s costs is as follows. Variable manufacturing cost per unit $ 2 Variable selling and administrative cost per unit 1 Fixed manufacturing overhead per month $ 250,000 Fixed selling and administrative cost per month 200,000 a. Determine the company's monthly break-even point in units. b. Determine the sales volume (in dollars) required for a monthly operating income of $900,000. c. Compute the company’s margin of safety if its current monthly sales level is $1,400,000. d. Estimate the amount by which monthly operating income will increase if Guthrie anticipates a $60,000 increase in monthly sales volume.
Guthrie Industries manufactures and sells dog collars. The collars sell for $12 each. Information about the company’s costs is as follows.
Variable
Variable selling and administrative cost per unit 1
Fixed manufacturing
Fixed selling and administrative cost per month 200,000
a. Determine the company's monthly break-even point in units.
b. Determine the sales volume (in dollars) required for a monthly operating income of $900,000.
c. Compute the company’s margin of safety if its current monthly sales level is $1,400,000.
d. Estimate the amount by which monthly operating income will increase if Guthrie anticipates a $60,000 increase in monthly sales volume.
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