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Rashid [163]
2 years ago
15

Management at the Flagstaff Company currently sells its products for $250 per unit and is contemplating a 40% increase in the se

lling price for the next year. Variable costs are currently 30% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will still pay the same variable cost per unit). Fixed expenses are $120,000 per year. If fixed costs were to decrease 10% during the current year and the new selling price goes into effect, how many units will need to be sold to breakeven
Business
1 answer:
elena-s [515]2 years ago
8 0

Answer:

393 units will need to be sold to breakeven

Explanation:

Break even point is the point where a Company makes neither makes a profit nor a loss.

Step 1 : Calculate new variables

New Sales = $250 x 1.40 = $350

Variable Costs = $250 x 30 % = $75

New Fixed Costs = $120,000 x 90 % = $108,000

Step 2 : Break even (units)

Break even (units) = Fixed Costs ÷ Contribution per unit

                               = $108,000 ÷ ($350 - $75)

                               = 393 units

Thus, 393 units will need to be sold to breakeven

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Rick Palmer received a $2,500 raise this year. This increased his salary as an associate TV producer from $45,000 to $47,500. Wh
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Sam buys fuel for his construction vehicles from the local distributer. He uses 8,500 gallons a month. The local distributor cha
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Answer:

He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.

Explanation:

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S = Ordering cost per order = $20.5

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