Tohatsu Company sells a product for $80 per unit. Costs related to the product a
ID: 2338119 • Letter: T
Question
Tohatsu Company sells a product for $80 per unit. Costs related to the product are as follows: Direct material cost per unit Direct labor cost per unit Variable manufacturing overhead per unit Variable selling and admin cost per unit Total fixed manufacturing cost Total fixed selling and admin 18 10 108,841 54,421 cost Calculate the following. ROUND TO THE NEAREST WHOLE NUMBER. USE ONLY WHOLE NUMBERS. DO NOT USE COMMAS, DOLLAR SIGNS, PERIODS, ETC 1. Tohatsu's breakeven point in units 2. The number of units Tohatsu must sell to earn a profit of $75,000. Assume no taxes 3. Tohatsu's current profit if they are selling 18,000 units and have a 20% tax rate. 4. The number of units Tohatsu must sell to earn a proft of $210,000 assuming they have a tax rate of 20%. 5. Tohatsu's proft if they increase the selling price to $94 and sell 14,000 units. Assume no taxes AV FS F2Explanation / Answer
Selling price per unit = $80
Variable costs per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Variable selling and administrative cost per unit
Variable costs per unit = $18 + $4 + $7 + $10
Variable costs per unit = $39
Fixed costs = Fixed manufacturing overhead + Fixed selling and administrative cost
Fixed costs = $108,841 + $54,421
Fixed costs = $163,262
Answer 1.
Contribution margin per unit = Selling price per unit - Variable costs per unit
Contribution margin per unit = $80 - $39
Contribution margin per unit = $41
Breakeven point in units = Fixed costs / Contribution margin per unit
Breakeven point in units = $163,262 / $41
Breakeven point in units = 3,982
Answer 2.
Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit
Required sales in units = ($163,262 + $75,000) / $41
Required sales in units = 5,811
Answer 3.
Income from operations = Contribution margin per unit * Number of units sold - Fixed costs
Income from operations = $41 * 18,000 - $163,262
Income from operations = $574,738
Net income = Income from operations * (1 - tax)
Net income = $574,738 * (1 - 0.20)
Net income = $459,790.40
Answer 4.
Net income = Income from operations * (1 - tax)
$210,000 = Income from operations * (1 - 0.20)
Income from operations = $262,500
Required sales in units = (Fixed costs + Income from operations) / Contribution margin per unit
Required sales in units = ($163,262 + $262,500) / $41
Required sales in units = 10,384
Answer 5.
Selling price per unit = $94
Variable costs per unit = $39
Contribution margin per unit = Selling price per unit - Variable costs per unit
Contribution margin per unit = $94 - $39
Contribution margin per unit = $55
Income from operations = Contribution margin per unit * Number of units sold - Fixed costs
Income from operations = $55 * 14,000 - $163,262
Income from operations = $606,738
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.