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Benson Company is considering adding a new product. The cost accountant has provided the following data: Expected variable cost of manufacturing Expected annual fixed manufacturing
Benson Company is considering adding a new product. The cost accountant has provided the following data:
Expected variable cost of manufacturing
Expected annual fixed manufacturing costs
$ per unit
The administrative vice president has provided the following estimates:
Expected sales commission
Expected annual fixed administrative costs
$ per unit
The manager has decided that any new product must at least break even in the first year.
Required
Use the equation method and consider each requirement separately.
a If the sales price is set at $ how many units must Benson sell to break even?
b Benson estimates that sales will probably be units. What sales price per unit will allow the company to break even?
c Benson has decided to advertise the product heavily and has set the sales price at $ If sales are units, how much can the company spend on advertising and still break even?
tablea Number of units,,b Sales price,,per unitc Advertising cost,
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