Question: lonic charge is a newly organized manufacturing business trial plans to manufacture and sell 60,000 units per year of a new product The following estimates have been made of the company's costs and expenses (other than income taxes): Manufacturing costs: Direct Materials Direct labor Fixed Variable per unit $25 15 manufacturing overhead $500,000 8 Period costs: Selling expenses Total Administrative expenses $300,000 800000 2 50 a.) What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year operations? b.) At the unit sales price compute in part a, How many units must the company produce and sell to break even? (Assume all units produced are sold)
Question: lonic charge is a newly organized manufacturing business trial plans to manufacture and sell 60,000 units per year of a new product The following estimates have been made of the company's costs and expenses (other than income taxes): Manufacturing costs: Direct Materials Direct labor Fixed Variable per unit $25 15 manufacturing overhead $500,000 8 Period costs: Selling expenses Total Administrative expenses $300,000 800000 2 50 a.) What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year operations? b.) At the unit sales price compute in part a, How many units must the company produce and sell to break even? (Assume all units produced are sold)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question:
lonic charge is a newly organized manufacturing business trial
plans to manufacture and sell 60,000 units per year of a new
product The following estimates have been made of the
company's costs and expenses (other than income taxes):
Manufacturing costs:
Direct Materials
Direct labor
Fixed
Variable per unit
$25
15
manufacturing overhead $500,000 8
Period costs:
Selling expenses
Total
Administrative expenses $300,000
800000
2
50
a.) What should the company establish as the sales price per unit
if it sets a target of earning an operating income of $700,000 by
producing and selling 60,000 units during the first year
operations?
b.) At the unit sales price compute in part a, How many units must
the company produce and sell to break even? (Assume all units
produced are sold)
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