Question
Albright Manufacturing, which maintains the same level of inventory at the end of each year, provided the following information about expenses anticipated for next year:
Albright Manufacturing, which maintains the same level of inventory at the end of each year, provided the following information about expenses anticipated for next year:
Fixed Expenses Variable Expenses per unit sold
Production Costs: $2.30
Direct Materials $4.70
Direct Labor $3.00
Factory Overhead $225,000
Selling Expenses:
Sales salaries and commissions $97,000 $0.75
Advertising $47,500
Miscellaneous selling expense $16,200
General Expenses:
Office salaries $92,000
Supplies $12,300 $0.25
Miscellaneous general expenses $15,000
Total $505,000 $11.00
The selling price of single product is $16. In recent years, profits have fallen and management is now considering a number of alternatives. Albright wants to have a net income next year of $250,000, but expects to sell only 120,000 units unless some changes are made.
Requirement:
Compute the breakeven point.
The president of Albright has asked you to calculate the companys projected net income (assuming 120,000 units are sold) and the sales needed to achieve the companys net income objective for next year. Also, compute Albrights contribution margin per unit, contribution margin ratio, and breakeven point for next year.
Based on Albrights current situation, will it earn its target net income? If not, how many units need to be sold to achieve the target?
HELP!!!!
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