Corporación Nueva has provided the following financial information: Variable cos

ID: 3198195 • Letter: C

Question

Corporación Nueva has provided the following financial information:

Variable costs per unit $ 450.

Sales prices per unit $ 600.

Total fixed costs $ 18,000.

Required:

to. Compute the tie point in units

b. Compute the dollar tie point

c. Compute the volume of sales in units if you want a net income "Net Income"

of $ 225,000 before contributions

d. Compute the volume of sales in dollars assuming an operational income (before contributions) of $ 300,000.

and. Determine the volume of sales in units and dollars, if a net income of $ 300,000 is desired. Consider a 40% tax rate.

Variable costs per unit $ 450, Sales prices per unit $ 600, Total fixed costs $ 18,000.

a. Compute the tie point in units

let the units be u

Revenue = price per unit x no. of units = 600u

cost = fixed cost + variable cost = fixed cost + no. of units x cost per unit = 18000 + 450u

Tie point : revenue = cost

600u = 18000 + 450u

150u = 18000

u = 120

so tie point units are 120 units

b. Compute the dollar tie point

Dollar tie point is : revenue or cost at 120 units = 120 x 600 = $72,000

c. Compute the volume of sales in units if you want a net income "Net Income" of $ 225,000 before contributions

Net income = Revenue - cost = 600u - (18000 +450u) = 150u - 18000 = 225,000

150u = 225000+18000 = 2,43,000

u = 243000/150 = 1620 units

d. Compute the volume of sales in dollars assuming an operational income (before contributions) of $ 300,000.

Net income = Revenue - cost = 600u - (18000 +450u) = 150u - 18000 = 300,000

150u = 300000+18000 = 3,18,000

u = 318000/150 = 2120 units

volume sales in dollars = units x price per unit = 2120 x 600 = $1272000

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