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Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $110,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 600 units per month. Required: 1) Compute the company's current break- even point in units and dollars. 2) What is the company's current margin of safety in units, dollars, and percentage?

Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $110,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 600 units per month. Required: 1) Compute the company's current break- even point in units and dollars. 2) What is the company's current margin of safety in units, dollars, and percentage?

FINANCIAL ACCOUNTING
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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Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $110,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 600 units per month. Required: 1) Compute the company's current break- even point in units and dollars. 2) What is the company's current margin of safety in units, dollars, and percentage?
Transcribed Image Text:Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $110,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 600 units per month. Required: 1) Compute the company's current break- even point in units and dollars. 2) What is the company's current margin of safety in units, dollars, and percentage?
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