Horizon Ltd. has fixed costs of $180,000 and variable costs of $6 per unit. Each unit is sold for $30, and the company expects to sell 10,000 units this year. Compute the operating profit (or loss) if the sales price decreases by 35%.

Horizon Ltd. has fixed costs of $180,000 and variable costs of $6 per unit. Each unit is sold for $30, and the company expects to sell 10,000 units this year. Compute the operating profit (or loss) if the sales price decreases by 35%.

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...

See similar textbooks

Similar questions

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?
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
Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.
Klamath Company produces a single product. The projected income statement for the coming year is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. 2. Suppose 10,000 units are sold above break-even. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. (Note: Round the contribution margin ratio to four decimal places, and round the sales revenue to the nearest dollar.) Suppose that revenues are 200,000 more than expected for the coming year. What would the total operating income be?
Summit Industries has annual fixed costs of $180,000 and variable costs of $5 per unit. Each unit currently sells for $20. If Summit expects to sell 15,000 units this year, what will the operating profit (or loss) be if the sales price decreases by 25%?
Jasmine Inc. makes a single product that it sells for $25 each. Variable costs are $13 per unit and annual fixed costs total $30,000 per year. The company would like to realize operating income next year of $60,000. What level of sales in dollars must the company achieve to reach its target profit?
Ratchet Ltd expects to sell 30,000 units this year. The selling price is set at $25 per unit. The variable cost per unit is $12 and annual fixed cost is $345,000. Assume a tax rate of 28%. Required: Calculate the following: Break-even point in dollars. Margin of safety in dollars. Number of units Ratchet Ltd has to sell to earn an after-tax profit of $420,000.
The fixed cost at Harley motors are $1M annually. The main product has a revenue of $9.90 per unit and $4.50 variable cost What is the annual profit (or loss) if 150,000 units are sold?
The fixed costs at Harley Motors are $1 million annually. The main product has revenue of $9.90 per unit and $4.50 variable cost. Determine the following:a. Breakeven quantity per yearb. Annual profit if 150,000 units are soldc. Annual profit if 480,000 units are sold
Harrison Co. expects to sell 200,000 units of its product next year, which would generate total sales of $17 million. Management predicts that pretax net income for next year will be $1,250,000 and that the contribution margin per unit will be $25. Use this information to compute next year’s total expected (a) variable costs and (b) fixed costs.
Krismuch Co. estimated that the company can sell 200,000 units of a product next period and earn a profit of P350,000 after tax of 30%. Fixed costs are estimated at P480,000 for the period. Variable costs are equal to two thirds of sales revenue. To meet this objective, what price must be charged for each unit of product?