Castleton Company has analyzed the costs of producing and selling 5,000 units of its only product to be as follows:
Direct materials .......................................................... $60,000
Direct labor ............................................................... 40,000
Variable factory overhead .............................................. 20,000
Fixed factory overhead ................................................. 30,000
Variable marketing and administrative expenses ................... 10,000
Fixed marketing and administrative expenses ...................... 15,000
Required:
(1) Compute the number of units needed to break even at a per unit sales price of $38.50.
(2) Determine the number of units that must be sold to produce an $18,000 profit, at a $40 per unit sales price.
(3) Determine the price Castleton must charge at a 5,000-unit sales level, to produce a profit equal to 20% of sales.