Q.2) Laraby Company produces a single product. It sold 25,000 units last year with the followingresults.SalesVariable costsFixed costs625,000375,000150,000100,00045,00055,000Income before taxesIncome taxes (45%)After-tax profitIn an attempt to improve its product, Laraby's managers are considering replacing a component partthat costs $2.50 with a new and better part costing $4.50 per unit during the coming year. A newmachine would also be needed to increase plant capacity. The machine would cost $18,000 and havea useful life of 6 years with no salvage value. The company uses straight-line depreciation on all plantassets. Required:a) What was Laraby Company's breakeven point in units last year?b) How many units of product would Laraby Company have had to sell in the past year to earn$77,000 in profit?c) If Laraby Company holds the sales price constant and makes the suggested changes, howmany units of product must be sold in the coming year to break even?d) If Laraby Company holds the sales price constant and makes the suggested changes, how manyunits of product will the company have to sell to make the same after-tax profit as last year?

Answered: Image /qna-images/answer/8f906c7f-377f-4f9b-99d7-3f7576464380.jpg

What was Laraby Company's breakeven point in units last year? How many units of product would Laraby Company have had to sell in the past year to earn $77,000 in profit? If Laraby Company holds the sales price constant and makes the suggested changes, how many units of product must be sold in the coming year to break even? If Laraby Company holds the sales price constant and makes the suggested changes, how many units of product will the company have to sell to make the same after-tax profit as last year?

What was Laraby Company's breakeven point in units last year? How many units of product would Laraby Company have had to sell in the past year to earn $77,000 in profit? If Laraby Company holds the sales price constant and makes the suggested changes, how many units of product must be sold in the coming year to break even? If Laraby Company holds the sales price constant and makes the suggested changes, how many units of product will the company have to sell to make the same after-tax profit as last year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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