In the dynamic landscape of manufacturing and sales, Caribann is a company with thepotential to produce 100,000 units of its sole product annually. Caribann's interplay of costsand production capacity prompts an analysis that will guide it in navigating the balancebetween revenue generation and cost management. As we examine Caribann's scenario,critical financial data emerges, laying the foundation for strategic decision-making. The following information is available:Selling price - -----------------------------------------------------$42 per unitVariable manufacturing costs -----------------------------------$24 per unitFixed manufacturing costs---------------------------------------$360,000 annuallyFixed marketing and administrative costs ---------------------$240,000 annuallyVariable marketing and administrative costs -----------------$4 per unit Required:1) Calculate breakeven point in units. 2) Compute the quantity of units which need to be sold to earn a target annual profit of$120,000
In the dynamic landscape of manufacturing and sales, Caribann is a company with the
potential to produce 100,000 units of its sole product annually. Caribann's interplay of costs
and production capacity prompts an analysis that will guide it in navigating the balance
between revenue generation and cost management. As we examine Caribann's scenario,
critical financial data emerges, laying the foundation for strategic decision-making.
The following information is available:
Selling price - -----------------------------------------------------$42 per unit
Variable
Fixed manufacturing costs---------------------------------------$360,000 annually
Fixed marketing and administrative costs ---------------------$240,000 annually
Variable marketing and administrative costs -----------------$4 per unit
Required:
1) Calculate breakeven point in units.
2) Compute the quantity of units which need to be sold to earn a target annual profit of
$120,000
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