Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC company has provided the following information about the company Sales = $210000 PRODUCTION Variable cost [manufacturing] = $ 43000 Fixed cost [manufacturing 1= $75000

image text in transcribed

ABC company has provided the following information about the company Sales = $210000 PRODUCTION Variable cost [manufacturing] = $ 43000 Fixed cost [manufacturing 1= $75000 SELLING & ADMIN Variable cost = $25000 Fixed cost = $32000 Units produced = 1500 Production capacity = 2000 units REQUIRED 1. Calculate CM per unit; CMR 2. Determine the breakeven point in units and $ 3. Calculate margin of safety in $ & %. 4. The sales manager believes that the company could increase sales by 700 units if advertising is increased by $15000. Should the company increase advertising expenses? 5. Determine the sales revenue necessary to generate before tax profit of $48000. 6. Determine sales revenue necessary to generate after-tax profit of $27000 if tax rate is 30% 7. Calculate degree of leverage (DOL) and if sales increases by 20%, what will be the net income of this company. (use original data in the beginning]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

South Western Federal Taxation 2016 Corporations Partnerships Estates And Trusts

Authors: James Boyd, William Hoffman, Raabe, David Maloney, Young

39th Edition

978-1305399884

Students also viewed these Accounting questions