Question 2 Polk Company developed the following information for its product: Per Unit Sales price $90 Variable cost 63) Contribution margin $27 Total fixed costs $1,080,000 Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers. How many units must be sold to break even? What is the total sales that must be generated for the company to earn a profit of $60,000? If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making? Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $210,000
Question 2 Polk Company developed the following information for its product: Per Unit Sales price $90 Variable cost 63) Contribution margin $27 Total fixed costs $1,080,000 Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers. How many units must be sold to break even? What is the total sales that must be generated for the company to earn a profit of $60,000? If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making? Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $210,000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 17E: Product cost method of product costing Smart Stream Inc. uses the product cost method of applying...
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Question 2
Polk Company developed the following information for its product:
Per Unit
Sales price $90
Variable cost 63)
Contribution margin $27
Total fixed costs $1,080,000
Instructions
Answer the following independent questions and show computations using the contribution margin technique to support your answers.
- How many units must be sold to break even?
- What is the total sales that must be generated for the company to earn a profit of $60,000?
- If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making?
- Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $210,000.
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