Chapter 3, Problem 45P

CVP Analysis—Missing Data

Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 150,000 units (produced and sold):

Required

1. a.      Compute Breed’s unit selling price that will yield a profit of $600,000, given sales of 150,000 units.
2. b.      Compute Breed’s dollar sales that will yield a projected 20 percent profit on sales, assuming variable costs per unit are 60 percent of the selling price per unit and fixed costs are $225,000.
3. c.       Management believes that a selling price of $9 per unit is reasonable given current market conditions. How many units must Breed sell to generate the revenues (dollar sales) determined in requirement (b)?