Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2. (12 points) Perkins Company produces and sells a single product. The company's income statement for the most recent month is given below: $435,000 Sales
2. (12 points) Perkins Company produces and sells a single product. The company's income statement for the most recent month is given below: $435,000 Sales (15,000 units at $29 per unit) Less variable costs: Direct materials (variable) Direct labor (variable) Variable factory overhead Variable selling and other expenses Contribution margin Less fixed expenses: Fixed factory overhead Fixed selling and other expenses Net operating income $60,000 75,000 45,000 30,000 210,000 225,000 100,000 85.000 185.000 $ 40,000 There are no beginning or ending inventories. Required: a. Compute the company's break-even point in units and sales dollars. b. What would the company's monthly net operating income be if sales and total variable costs increased by 30% and total fixed factory overhead dropped by $25,000? c. What total level of sales (in units) must the company achieve in order to earn a target profit of $145,000? d. The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 50 percent, but it will double the costs for fixed factory overhead. Every other cost remains unchanged. Compute the new break-even point in units
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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