Answer:
salesman sell before contributes anything to manufacturing overhead and profit = 1852 units
Explanation:
given data
Sale price = $36
variable cost = 40%
budgeted auto and travel expenses = $12,000
salary = $28,000
to find out
how many units will the salesman sell before contributes anything to manufacturing overhead and profit
solution
we get here makes variable cost that is
makes variable cost = 40% of $36
makes variable cost = $14.40
so contribution margin per unit will be
contribution margin = 36 - 14.4
contribution margin = $ 21.60
and Fixed cost will be as
Fixed cost = salary + budgeted auto and travel expenses
Fixed cost = 28000 + 12000
Fixed cost = $40000
and now salesman sell before contributes anything to manufacturing overhead and profit will be as
salesman sell before contributes anything to manufacturing overhead and profit = Fixed cost ÷ Contribution margin per unit .......................1
salesman sell before contributes anything to manufacturing overhead and profit =
salesman sell before contributes anything to manufacturing overhead and profit = 1852 units
