Want answer Washington Corporation sells a product for $400per unit. Its market share is 35 percent of theunits sold. The marketing manager believes thatthe market share can be increased to 40 percentof the units sold with a reduction in price to$350. The product is currently earning a profit of$60 per unit. The president of WashingtonCorporation believes that his company needs tomaintain the same profit level per unit. The totalmarket for the product has annual sales of12,500 units.a) How many dollars does WashingtonCorporation currently sell of the product eachyear?b) What is the target price per unit?c) What is the target cost per unit?

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Answered: Washington Corporation sells a product…

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 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...

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Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.
Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of $160. The companys monthly fixed expenses are $36,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of November when they will sell 130 units. How many units will Marlin need to sell in order to realize a target profit of $48,000? What dollar sales will Marlin need to generate in order to realize a target profit of $48.000? Construct a contribution margin income statement for the month of February that reflects $200,000 in sales revenue for Marlin Motors.
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Alley Company is a speaker maker. Each speaker is priced at $400. The corporation spends $300 on the speaker. The corporation believes that in order to succeed in the economy, it needs reduce its sale price to $360. The marketing department believes that by lowering the purchase price by 20%, profits will rise by 20%. Currently, the firm offers 450,000 speakers a year. What should the target expense be, rounded to the nearest cent, if the target profit margin is 28% of revenue in order to maintain the competitive price of $360? Please Help
Nytre Limited sells executive office chairs for a price of $195 each. The contribution margin ratio of the chairs is 60% and the company’s fixed costs for this year are expected to be $80,000. The company has a profit target this year of $85,000 and is considering an improved design which is expected to increase sales. Question 13: How many chairs must the company sell to reach its profit target?
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer's management desires a 12.5% profit margin on sales. Its current full cost for the product is $44 per unit.If the company cannot cut costs any lower than they already are, what would the profit margin on sales be to meet the market selling price?
Thomas Company buys and sells a product that has a variable cost per unit of $14. Thomas' fixed costs amount to $66,000. The product sells for $18 each. Thomas currently expects to make and sell 23,000 units. Management believes that if the price per unit is lowered by one dollar, the Company could sell an additional 3,000 units of product. If Thomas implements the lower price strategy, profitability will Multiple Choice O increase by $5,600. decrease by $3,000. decrease by $14,000. increase by $17,000.
Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below. Deluxe Standard First quarter 12,000 90,000 Second quarter 14,200 88,600 Third quarter 16,800 93,000 Fourth quarter 20,000 91,400 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show…
Coney Adventures Inc. sells one product for $5. The variable cost per item is $3, and the fixed costs for the firm are $40. Assume that Redlands currently sells 40 units. Redlands estimates that if it increased sales price to $6 per unit demand would decrease by 10%. Determine if Redlands should increase its selling price. (Ignore income taxes.) Assume that Redlands currently sells 30 units and has a 40% income tax rate. The firm estimates that a $25 increase in fixed cost from automating the plant would lower variable costs to $2 per unit. Determine if Redlands should change its cost structure.
The Widget Co. currently sells 800 widgets per week for a price of $7.00 each. Their market research indicates that for each $0.50 increase in price they will sell 25 fewer widgets per week. What price should they charge to maximize sales income?

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