Question
Batoo Company produces and sells disposable foil baking pans to retailers for $3.20 per pan. The variable costs per pan are as follows: Direct materials
Batoo Company produces and sells disposable foil baking pans to retailers for $3.20 per pan. The variable costs per pan are as follows:
Direct materials $0.77 Direct labor 0.71 Variable overhead 0.60 Selling 0.32 Fixed manufacturing costs total $151,650 per year. Administrative costs (all fixed) total $28.350.
Required
1. Compute the number of pans that must be sold for Batoo to break even. 2. How many pans mustbe sold for Batoo to earn a before-tax profit of $12,600?
3. What is the unit variable cost? What is the unit variable manufacturing cost? Which is used in cost-volume-profit analysis, and why?
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