Question
Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 151,000 units (produced and sold): Total
Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 151,000 units (produced and sold):
Total Annual Costs (151,000 units) | |||
Direct material | $ | 298,000 | |
Direct labor | 258,000 | ||
Manufacturing overhead | 209,000 | ||
Selling, general, and administrative | 149,000 | ||
Total | $ | 914,000 | |
Required:
a. Compute Breeds unit selling price that will yield a profit of $596,000, given sales of 151,000 units. (Round your answer to 2 decimal places.)
b. Compute Breeds dollar sales that will yield a projected 26 percent profit on sales, assuming variable costs per unit are 54 percent of the selling price per unit and fixed costs are $424,000.
c. Management believes that a selling price of $7.60 per unit is reasonable given current market conditions. How many units must Breed sell to generate the revenues (dollar sales) determined in requirement (b)? (Round your final answer to nearest whole unit.)
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