The Robinson Lawn Chair Company produces and sells a single high-priced lawn chair and in fiscal 2016 the company produced and sold 30,000 units. The 2016 income statement of the company reported the following: Sales $1,800,000 Variable Costs $1,350,000 Fixed Costs $240,000 Income before Taxes $210,000 (a) Compute the contribution margin per unit. (b) How many units must be sold to break even? (c) Compute the new breakeven point if the price of unit is increased to $65 and additional $102,000 per year will be paid for advertising
The Robinson Lawn Chair Company produces and sells a single high-priced lawn chair and in fiscal 2016 the company produced and sold 30,000 units. The 2016 income statement of the company reported the following: Sales $1,800,000 Variable Costs $1,350,000 Fixed Costs $240,000 Income before Taxes $210,000 (a) Compute the contribution margin per unit. (b) How many units must be sold to break even? (c) Compute the new breakeven point if the price of unit is increased to $65 and additional $102,000 per year will be paid for advertising
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Robinson Lawn Chair Company produces and sells a single high-priced lawn chair and in fiscal 2016 the company produced and sold 30,000 units. The 2016 income statement of the company reported the following:
Sales $1,800,000
Variable Costs $1,350,000
Fixed Costs $240,000
Income before Taxes $210,000
(a) Compute the contribution margin per unit.
(b) How many units must be sold to break even?
(c) Compute the new breakeven point if the price of unit is increased to $65 and additional $102,000 per year will be paid for advertising.
(d) Assuming a tax rate of 25%, how many units must be sold to gain an after tax profit of $200,000
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