Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

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Answer 1

Question

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

b)

To determine

Find the break-even sales (units) based on the part (a).

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

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On 1st May, 2024 you are engaged to audit the financial statement of Giant Pharmacy for the period ending 30th December 2023. The Pharmacy is located at Mgeni Nani at the outskirts of Mtoni Kijichi in Dar es Salaam City. Materiality is judged to be TZS. 200,000/=. During the audit you found that all tests produced clean results. As a matter of procedures you drafted an audit report with an unmodified opinion to be signed by the engagement partner. The audit partner reviewed your file in October, 2024 and concluded that your audit complied with all requirements of the international standards on auditing and that; sufficient appropriate audit evidence was in the file to support a clean audit opinion. Subsequently, an audit report with an unmodified opinion was issued on 1st November, 2024. On 18th January 2025, you receive a letter from Dr. Fatma Shemweta, the Executive Director of the pharmacy informing you that their cashier who has just absconded has been arrested in Kigoma with TZS.…

Answer 2

Question

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

b)

To determine

Find the break-even sales (units) based on the part (a).

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

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Answer 3

Question

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

b)

To determine

Find the break-even sales (units) based on the part (a).

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

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Answer 4

Question

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

b)

To determine

Find the break-even sales (units) based on the part (a).

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

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Answer 5

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

b)

To determine

Find the break-even sales (units) based on the part (a).

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

Answer 6

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

Answer 7

Chapter 20, Problem 1BP

a)

To determine

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

Answer 8

b)

To determine

Find the break-even sales (units) based on the part (a).

Answer 9

b)

To determine

Find the break-even sales (units) based on the part (a).

Answer 10

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

Answer 11

c)

To determine

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

Answer 12

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

Answer 13

d)

To determine

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 20 - Prob. 1STQ Ch. 20 - Prob. 2STQ Ch. 20 - Prob. 3STQ Ch. 20 - Prob. 4STQ Ch. 20 - Prob. 5STQ Ch. 20 - Prob. 1DQ Ch. 20 - Prob. 2DQ Ch. 20 - Prob. 3DQ Ch. 20 - Prob. 4DQ Ch. 20 - 5. Define the relevant range of activity.

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

Find out the sales price per unit, if Company N sets a target of earning an operating income of $200,000 by producing and selling 40,000 units during the first year of operations.

Find the break-even sales (units) based on the part (a).

Find the margin of safety (in $), in case the company produces and sells 40,000 units at the sales price computed in part (a).

Explain whether setting the sales price at $96 enable the company to break-even by manufacturing and selling 40,000 units, where the price of this product should not be higher than $96 to ensure market penetration.

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Chapter 20 Solutions