Question
A company has a selling price of $16 a unit, variable costs of $8. a unit, and fixed cost of $20,000. a) what is the
A company has a selling price of $16 a unit, variable costs of $8. a unit, and fixed cost of $20,000.
a) what is the breakeven in dollar sales
b) what quantity must be sold to earn a profit of $40,000?
c) what is the Margin of Safety
d) what is the firm's contribution margin per unit?
e) how many units need to be sold to make an after tax profit of 90,000? the tax rate is 40%.
f) how many units must be sold to earn a profit that 20% of sales revenue?
g) Assume the company sells 10,o00 units and the total contribution margin increases by 20% holding revenues constant, what is the income for the company?
h) By how much can fixed cost increase, if the firm increases its sales price by $4 and wants to make a profits of $40,000 by selling 9,000 units?
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