12 (20 points) Webber, inc. developed the folio wing information for its product
ID: 2574915 • Letter: 1
Question
12 (20 points) Webber, inc. developed the folio wing information for its product: Per Unit Sales price Variable coste www Contribution margin $90 63 S27 Total fixed costs $1.030,000 Answer the following Independent questions and show computations using the contribution margin technique to support your answers 1, How many units must be sold to break even? 2. What is the total sales that must be generated for the company to oarn a profit of $60,000? 3. If the company is presently seling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making? 4 using the original data in the problem, compute a new break-even point in units if the und sales p ce s increased 20%, unit vanable cost is increased by 10%, and total bed costs are increased by $210,000.Explanation / Answer
1 Break even = Total fixed costs/Unit contribution margin = 1080000/27=40000 2 Contribution margin ratio = 27/90 = 30% Total sales = (1080000+60000)/30%= 3800000 3 Additional units to be sold = 108000/27= 4000 4 Nw selling price = 90*1.2 = 108 New variable cost = 63*1.1 = 69.3 New fixed costs = 1080000+210000= 1290000 New break even = 1290000/(108-69.3)= 33333
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