Operating Income of $220,000 in 2019, when production was 3,000 units Variable expenses per unit: Direct Material $58 Direct Labour $74 Variable Manufacturing Overhead $48 Fixed expenses: Fixed Manufacturing Overhead $215,000 Fixed Selling Costs $65,000 Fixed Administrative Costs $160,000 The President of Benoit is under pressure from shareholders to increase operating income by 50% in 2020. Management expects per unit data and total fixed costs to remain the same in 2020. Compute the number of units that would have to be sold in 2020 to reach the shareholders desired profit level. Is this a realistic goal?
Operating Income of $220,000 in 2019, when production was 3,000 units Variable expenses per unit: Direct Material $58 Direct Labour $74 Variable Manufacturing Overhead $48 Fixed expenses: Fixed Manufacturing Overhead $215,000 Fixed Selling Costs $65,000 Fixed Administrative Costs $160,000 The President of Benoit is under pressure from shareholders to increase operating income by 50% in 2020. Management expects per unit data and total fixed costs to remain the same in 2020. Compute the number of units that would have to be sold in 2020 to reach the shareholders desired profit level. Is this a realistic goal?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Operating Income of $220,000 in 2019, when production was 3,000 units
Variable expenses per unit: Direct Material $58
Direct Labour $74
Variable Manufacturing Overhead $48
Fixed expenses: Fixed Manufacturing Overhead $215,000
Fixed Selling Costs $65,000
Fixed Administrative Costs $160,000
The President of Benoit is under pressure from shareholders to increase operating income by 50% in
2020. Management expects per unit data and total fixed costs to remain the same in 2020. Compute
the number of units that would have to be sold in 2020 to reach the shareholders desired profit level. Is
this a realistic goal?
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