Question

Bauer Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $100. Variable costs Manufacturing $ 30 per unit Selling 12 per unit Fixed costs Manufacturing $ 360,000 per year Selling and administrative $ 162,000 per year Required Use the per-unit contribution margin approach to determine the break-even point in units and dollars. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $232,000. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 12,000 units, how much could it pay in salaries for salespeople and still have a profit of $232,000? (Hint: Use the equation method.)

Answer 1

Answer:

Instructions are listed below

Explanation:

Giving the following information:

The sales price is $100.

Variable costs:

Manufacturing $ 30 per unit

Selling $12 per unit

Fixed costs:

Manufacturing $ 360,000 per year

Selling and administrative $ 162,000 per year

A)

Break-even point (units)= fixed costs/ contribution margin

Break-even point (units)= (360000+162000)/(100 - 42)= 9000 units

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 522,000/(58/100)= $90,000

B) Profit= 232,000

Break-even point (units)= (522,000 + 232,000)/58= 13,000 units

Break-even point (dollars)= 754,000/ 0.58= $1,300,000

C) No variable selling costs. Q= 12,000

12,000= (360,000 + X + 232000)/(100-30)

(12000*70)-232000 - 360000= X

X= 248,000