Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000units at a price of $320 each. Product costs include: Direct materials $68Direct labor $40Variable overhead $12Total fixed factory overhead $500,000 Variable selling expense is a commission of 5 percent of price; fixed selling and administrativeexpenses total $116,400.Required:1. Calculate the sales commission per unit sold. Calculate the contribution margin per unit.2. How many units must Jay-Zee Company sell to break even? Prepare an income statementfor the calculated number of units.3. Calculate the number of units Jay-Zee Company must sell to achieve target operatingincome (profit) of $333,408.4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000?Would the number of units needed increase or decrease compared to your answer inRequirement 3? Compute the number of units needed for the new target operating income.
Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000
units at a price of $320 each. Product costs include:
Direct materials $68
Direct labor $40
Variable
Total fixed factory overhead $500,000
Variable selling expense is a commission of 5 percent of price; fixed selling and administrative
expenses total $116,400.
Required:
1. Calculate the sales commission per unit sold. Calculate the contribution margin per unit.
2. How many units must Jay-Zee Company sell to break even? Prepare an income statement
for the calculated number of units.
3. Calculate the number of units Jay-Zee Company must sell to achieve target operating
income (profit) of $333,408.
4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000?
Would the number of units needed increase or decrease compared to your answer in
Requirement 3? Compute the number of units needed for the new target operating income.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
