Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows: Number of canoes produced and sold 400 600 750 Total costs Variable costs $ 67,500 $ 101,250 $ 126,563 Fixed costs $ 150,000 $ 150,000 $ 150,000 Total costs $ 217,500 $ 251,250 $ 276,563 Cost per unit Variable cost per unit $ 168.75 $ 168.75 $ 168.75 Fixed cost per unit 375.00 250.00 200.00 Total cost per unit $ 543.75 $ 418.75 $ 368.75 Sandy Bank sells its canoes for $550 each. Required: 1. Suppose that Sandy Bank raises its selling price to $675 per canoe. Calculate its new break-even point in units and in sales dollars. 2. If Sandy Bank sells 650 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $675.) 3. Calculate the number of canoes that Sandy Bank must sell at $675 each to generate $100,000 profit.
Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows: Number of canoes produced and sold 400 600 750 Total costs Variable costs $ 67,500 $ 101,250 $ 126,563 Fixed costs $ 150,000 $ 150,000 $ 150,000 Total costs $ 217,500 $ 251,250 $ 276,563 Cost per unit Variable cost per unit $ 168.75 $ 168.75 $ 168.75 Fixed cost per unit 375.00 250.00 200.00 Total cost per unit $ 543.75 $ 418.75 $ 368.75 Sandy Bank sells its canoes for $550 each. Required: 1. Suppose that Sandy Bank raises its selling price to $675 per canoe. Calculate its new break-even point in units and in sales dollars. 2. If Sandy Bank sells 650 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $675.) 3. Calculate the number of canoes that Sandy Bank must sell at $675 each to generate $100,000 profit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows:
| Number of canoes produced and sold | 400 | 600 | 750 | |||
| Total costs | ||||||
| Variable costs | $ | 67,500 | $ | 101,250 | $ | 126,563 |
| Fixed costs | $ | 150,000 | $ | 150,000 | $ | 150,000 |
| Total costs | $ | 217,500 | $ | 251,250 | $ | 276,563 |
| Cost per unit | ||||||
| Variable cost per unit | $ | 168.75 | $ | 168.75 | $ | 168.75 |
| Fixed cost per unit | 375.00 | 250.00 | 200.00 | |||
| Total cost per unit | $ | 543.75 | $ | 418.75 | $ | 368.75 |
Sandy Bank sells its canoes for $550 each.
Required:
1. Suppose that Sandy Bank raises its selling price to $675 per canoe. Calculate its new break-even point in units and in sales dollars.
2. If Sandy Bank sells 650 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $675.)
3. Calculate the number of canoes that Sandy Bank must sell at $675 each to generate $100,000 profit.
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