er 5-HW 6 Check my Minden Company introduced a new product last year for which i
ID: 2605506 • Letter: E
Question
er 5-HW 6 Check my Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest $93 per unit, and variable expenses are $63 per unit. Fixed expenses are $838.200 per year. The present annual sales volume (at the $93 selling price) is 25,300 units. Required: 1. What is the present yearly net operating income or loss? ook 2. What is the present break-even point in unit sales and in dollar sales? 3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? ences 4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g, the selling price at the level of maximum profits)? Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3 Required 4 What is the present yearly net operating income or loss? Required 2> Prev 1 of 5 NextExplanation / Answer
Answer
A
Units Sold
25300
B
Sale Price per unit
93
C
Variable expenses per unit
63
D=B-C
Contribution margin per unit
30
E=A x D
Total contribution margin
759000
F
Fixed expenses
838200
G=E-F
Net operating Income (Loss)
(79200)
A
Fixed expenses
838200
B
Contribution margin per unit
30
C=A/B
Break Even point in Unit Sales
27940
D
Sale Price per unit
93
E=C x D
Break Even point in Dollar Sales
$ 2598420
Sno.
Sale Price per unit (A)
Units Sold (B)
Variable Cost per unit (C )
Contribution per unit (D=A-C)
Total contribution (E=B x D)
Fixed Expenses (F)
Net Operating Income/(loss) [G=E-F]
1
93
25300
63
30
759000
838200
-79200
2
91
30300
63
28
848400
838200
10200
3
89
35300
63
26
917800
838200
79600
4
87
40300
63
24
967200
838200
129000
5
85
45300
63
22
996600
838200
158400
6
83
50300
63
20
1006000
838200
167800
7
81
55300
63
18
995400
838200
157200
8
79
60300
63
16
964800
838200
126600
9
77
65300
63
14
914200
838200
76000
10
75
70300
63
12
843600
838200
5400
11
73
75300
63
10
753000
838200
-85200
12
71
80300
63
8
642400
838200
-195800
It is clear from above working that at Selling Price of $83 per unit, company will earn maximum Net Income.
Maximum income that can be earn = $ 167800, at 50300 units sold at $83 per unit.
A
Fixed expenses
838200
B
Contribution margin per unit [83 – 63]
20
C=A/B
Break Even point in Unit Sales
41910
D
Sale Price per unit
83
E=C x D
Break Even point in Dollar Sales
3478530
A
Units Sold
25300
B
Sale Price per unit
93
C
Variable expenses per unit
63
D=B-C
Contribution margin per unit
30
E=A x D
Total contribution margin
759000
F
Fixed expenses
838200
G=E-F
Net operating Income (Loss)
(79200)
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