osario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed osts are 3,700,000 p per year. The variable cost of each component is 1,400 p, and the components are sold for 3,800 peach. The ompany sold 5,500 components during the prior year.(p denotes the peso, Argentina's national currency. Several countries use the eso as their monetary unit. On the day this exercise was written, Argentina's peso was worth 0.104 U.S. dollar. In the following equirements, ignore income taxes.) equired: Compute the break-even point in units. (Round your answer to the nearest whole number.) . What will the new break-even point be if fixed costs increase by 5 percent? (Round your answer to the nearest whole number.) . What was the company's net income for the prior year? 1000 000
osario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed osts are 3,700,000 p per year. The variable cost of each component is 1,400 p, and the components are sold for 3,800 peach. The ompany sold 5,500 components during the prior year.(p denotes the peso, Argentina's national currency. Several countries use the eso as their monetary unit. On the day this exercise was written, Argentina's peso was worth 0.104 U.S. dollar. In the following equirements, ignore income taxes.) equired: Compute the break-even point in units. (Round your answer to the nearest whole number.) . What will the new break-even point be if fixed costs increase by 5 percent? (Round your answer to the nearest whole number.) . What was the company's net income for the prior year? 1000 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Po.32.
Transcribed Image Text:Exercise 7-25 Manufacturing; Using CVP Analysis (LO 7-1, 7-4)
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed
costs are 3,700,000 p per year. The variable cost of each component is 1,400 p, and the components are sold for 3,800 p each. The
company sold 5,500 components during the prior year. (p denotes the peso, Argentina's national currency. Several countries use the
peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth 0.104 U.S. dollar. In the following
requirements, ignore income taxes.)
Required:
1. Compute the break-even point in units. (Round your answer to the nearest whole number.)
2. What will the new break-even point be if fixed costs increase 5 percent? (Round your answer to the nearest whole number.)
3. What was the company's net income for the prior year?
4. The sales manager believes that a reduction in the sales price to 3,300 p will result in orders for 600 more components each year.
What will the break-even point be if the price is changed? (Round your answer to the nearest whole number.)
5. Should the price change discussed in requirement 4 be made?
1. Break-even point
2. New break-even point
components
components
3. Net income
4. New break-even point
components
5. Should the price change discussed in requirement 4 be made?
p
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