Blue Sky manufactures mattresses for regional furniture companies in USA. Blue Sky has the following information Selling
Question:
Blue Sky manufactures mattresses for regional furniture companies in USA. Blue Sky has the following information
Selling price per unit ..........................$0.60
Variable Direct Material .....................$0.12
Variable Direct Labor ........................$0.18
Fixed Overhead Cost......................$1,500
Calculate the following:
a) How many units must be sold to have an operating income of $1,800?
b) If management offers a 20% discount, then how many units must be sold to have an operating income of $1,800?
c) What is the breakeven point in units?
d) What is the Contribution margin per unit?
e) What is the target sales dollars to have an operating income of $1,800?
f) Assume tax rate of 40%. How many units must be sold to have an operating income of $1,800?
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
a Computation of the no of units must be sold to have an operating income of 1800 Given information Selling price per unit 060 Variable Direct Material 012 Variable Direct Labor 018 Total Variable Cos...View the full answer
