Answered step by step
Verified Expert Solution
Question
1 Approved Answer
15. Furry Friends, Inc. produces a high-quality pet carrier that sells for $34 per unit. Variable expenses are $18 per unit, and fixed expenses are
15. Furry Friends, Inc. produces a high-quality pet carrier that sells for $34 per unit. Variable expenses are $18 per unit, and fixed expenses are $230,000 per year. Required: (25 points) (1) Compute the company's break-even point in units sold. (2) If the company's current sales volume is 17,000 units: a. What is its margin of safety in dollars? b. What is its margin of safety percentage? c. What is its net operating income? (3) How many units must the company sell to attain a target profit of $20,000? (4) Prepare a cost-volume-profit (CVP) graph for the company from 0 units up to 20,000 units sold. Be sure to label the following items on your graph. a. X-axis and what it represents b. y-axis and what it represents c. Fixed expenses line d. Total expenses line e. Total sales line f. Break-even point g. Profit area h. Loss area (5) If the company can reduce its fixed expenses by $10,000 next year, what would its break- even point be in units sold, assuming all other factors remain the same
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started