"Relevant costs for pricing decisions are full costs of the product." Do you agree? Explain. A. Yes, full costs of the produ
1 answer:
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Answer:
BEP units: 42,017
BEP dollars: 2,100,850
unit cost at 100,000 units produced: 22.40 dollars
operating profit : 1,656,000
Explanation:
50 - 2.4 = 47.6 contirbution margin per unit
2,000,000/47.6 = 42.016,80 BEP units
BEP units x sales price = BEP dollars
42,017 x 50 = 2,100,850
(B)
fixed cosy/ units produced = fixed cost per unit
2,000,000/ 100,000 = 20 fixed cost per unit
fixed cost + variable cost = total cost
20 + 2.40 = 22.4
(C)
There are 40% units sold at the preferred customer at cost
So we sale at gain only 60% of the units:
100,000 units x 60% x 50 = 3,000,000
100,000 units x 40% x 22.40 = 896,000
Total revenue 3,896,000
Cost: 100,000 x 22.40 <u> (2,240,000) </u>
operating profit 1,656,000