Last year Minden Company introduced a new product and sold 14,000 units at a price of $72 per unit. The product's variable expensesare $42 per unit and its fixed expenses are $516,600 per year.Required:1. What was this product's net operating income (loss) last year?2. What is the product's break-even point in unit sales and dollar sales?3. Assume the company conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units foreach $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., $70, $68, etc.),What is the maximum annual profit it can earn on this product? What sales volume and selling price per unit generate the maximumprofit?4. What would be the break-even point in unit sales and dollar sales using the selling price you calculated in requirement 3?

The question is based on the concept of Cost Accounting.Net operating profit or loss is the…

Answered: Last year Minden Company introduced a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sphrantzes Company recently sold 175 units at a price of $650 per unit. During the same time the company reported total variable costs of $85,575 and net income of $13,975. If the company's price per unit were decreased by $35, its volume increased by 20 units and its fixed costs increased by $1,000, what would be the company's projected net income?
2. An audio equipment manufacturer produced and sold 725 sound systems and made a net income of $50, 000 last year, with a total revenue of $1, 015, 000. The manufacturer's break-even volume is 600 units. a. Calculate the selling price of each sound system. b. Calculate the variable costs for each sound system. c. Calculate the fixed costs per year.
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