Leverage Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Sales $2,000,000 Less: Variable costs 1,400,000 Contribution margin $600,000 Less: Fixed costs 450,000 Operating income $150,000 Question: How many units must be sold to earn a profit equal to 10 percent of sales?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Leverage Faldo Company produces a single product. The
Sales $2,000,000
Less: Variable costs 1,400,000
Contribution margin $600,000
Less: Fixed costs 450,000
Operating income $150,000
Question:
- How many units must be sold to earn a profit equal to 10 percent of sales?
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