Rusty, Inc. is the sole distributor of a computer product that sells for $50 per unit, and has a contribution margin ratio of 30%. The company's fixed expenses are $200,000 per year, and variable costs per unit are $30. Rusty plans to sell 18,000 units this year. Required: a) What is the break-even point in units sold? b) What is the break-even point in sales dollars? =) How many units must be sold to attain a target profit of $50,000 per year? d) Assume that by using a more efficient machine, the company is able to reduce its variable expenses by $4 per unit. What is the company's new break-even point in units?
Rusty, Inc. is the sole distributor of a computer product that sells for $50 per unit, and has a contribution margin ratio of 30%. The company's fixed expenses are $200,000 per year, and variable costs per unit are $30. Rusty plans to sell 18,000 units this year. Required: a) What is the break-even point in units sold? b) What is the break-even point in sales dollars? =) How many units must be sold to attain a target profit of $50,000 per year? d) Assume that by using a more efficient machine, the company is able to reduce its variable expenses by $4 per unit. What is the company's new break-even point in units?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Rusty, Inc. is the sole distributor of a computer product that sells for $50 per unit, and has
a contribution margin ratio of 30%. The company's fixed expenses are $200,000 per year, and variable
costs per unit are $30. Rusty plans to sell 18,000 units this year.
Required:
a) What is the break-even point in units sold?
b) What is the break-even point in sales dollars?
c) How many units must be sold to attain a target profit of $50,000 per year?
d) Assume that by using a more efficient machine, the company is able to reduce its variable
expenses by $4 per unit. What is the company's new break-even point in units?
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