Mathias Corporation manufactures and sells wire rakes. The rakes sell for $20 each. Information about the company's costs is as follows: Variable manufacturing cost per unit.. $9 Variable selling and administrative cost per unit.... $4 Fixed manufacturing overhead per month..... ... $250,000 Fixed selling and administrative cost per month.. . $350,000 a. Determine the company's monthly break-even point in units. b. Determine the sales volume (in dollars) required for a monthly operating income of $100,000. c. Estimate the amount by which monthly operating income will increase if the company anticipates a $200,000 increase in monthly sales volume.
Mathias Corporation manufactures and sells wire rakes. The rakes sell for $20 each. Information about the company's costs is as follows: Variable manufacturing cost per unit.. $9 Variable selling and administrative cost per unit.... $4 Fixed manufacturing overhead per month..... ... $250,000 Fixed selling and administrative cost per month.. . $350,000 a. Determine the company's monthly break-even point in units. b. Determine the sales volume (in dollars) required for a monthly operating income of $100,000. c. Estimate the amount by which monthly operating income will increase if the company anticipates a $200,000 increase in monthly sales volume.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mathias Corporation
manufactures
and sells wire rakes. The rakes sell for
$20 each. Information about the
company's costs is as follows:
Variable manufacturing cost per unit..
$9
Variable selling and administrative cost
per unit....
$4
Fixed manufacturing overhead per
month.....
... $250,000
Fixed selling and administrative cost
per month..
. $350,000
a. Determine the company's monthly
break-even point in units.
b. Determine the sales volume (in
dollars) required for a monthly
operating income of $100,000.
c. Estimate the amount by which
monthly operating income will
increase if the company anticipates a
$200,000 increase in monthly sales
volume.
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VIEWStep 2: Working for contribution margin per unit, contribution margin ratio and total fixed cost
VIEWStep 3: Working for break even point in units
VIEWStep 4: Working for sales volume required for operating income
VIEWStep 5: Working for increase in operating income
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