Suppose you manufacture and sell motorcycle helmets. Helmets sell for $25 each. Information about the company’s costs is as follows Variable manufacturing cost per unit $7 Variable selling and administrative cost per unit $3 Fixed manufacturing overhead per month $300,000 Fixed selling and administrative cost per month $600,000 a) Determine the company’s break-even point in units b) Determine the company’s break-even sales volume in $ c) Calculate unit contribution margin d) Determine the sales volume (in $) required for a monthly operating income of $1,300,000 e) Determine the sales volume required to reach an income of $1,300,000 in units of helmets. f) Estimate the company’s monthly operating loss if it sells only 70,000 units of helmets.
Suppose you manufacture and sell motorcycle helmets. Helmets sell for $25 each. Information about the company’s costs is as follows Variable manufacturing cost per unit $7 Variable selling and administrative cost per unit $3 Fixed manufacturing overhead per month $300,000 Fixed selling and administrative cost per month $600,000 a) Determine the company’s break-even point in units b) Determine the company’s break-even sales volume in $ c) Calculate unit contribution margin d) Determine the sales volume (in $) required for a monthly operating income of $1,300,000 e) Determine the sales volume required to reach an income of $1,300,000 in units of helmets. f) Estimate the company’s monthly operating loss if it sells only 70,000 units of helmets.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CE
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Suppose you manufacture and sell motorcycle helmets. Helmets sell for $25 each. Information about the company’s costs is as follows
Variable
Variable selling and administrative cost per unit $3
Fixed manufacturing
Fixed selling and administrative cost per month $600,000
- a) Determine the company’s break-even point in units
- b) Determine the company’s break-even sales volume in $
- c) Calculate unit contribution margin
- d) Determine the sales volume (in $) required for a monthly operating income of $1,300,000
- e) Determine the sales volume required to reach an income of $1,300,000 in units of helmets.
- f) Estimate the company’s monthly operating loss if it sells only 70,000 units of helmets.
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