Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it f

Question

Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows: 650 S 63,000 91.000 S112,000 S250,200 $278,200 $299,200 S 140.00 140.00 S 140.00 S 556.00 428.00 S 374.00 Number of canoes produced and sold Total costs 450 800 Variable costs Fixed costs $187 $187 Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit 416.00 234.00 Required 1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars. (Do not round intermediate calculations. Round your final answers to nearest whole number.) New Break-Even Units Canoes Break-Even Sales Revenue 2. If Sandy Bank sells 700 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $500.) (Round your answers to the nearest whole number.) Margin of Safety Percentage of Sales 3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $110,000 profit. (Round your answer to the nearest whole number.) Target Sales Units Canoes

Explanation / Answer

1 New break-even units = 187200/(500-140)= 520 Canoes Break-even sales revenue = 520*500 = $260000 2 Margin of safety = (700-520)*500= $90000 Percentage of sales = 90000/(700*500)=26% 3 Target sales units=(187200+110000)/(500-140)= 826

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