Question
Campbell Company makes and sells products with variable costa of $24 each. Campbell incurs annual fixed costs of $340,360. The current sales price is $91.
Campbell Company makes and sells products with variable costa of $24 each. Campbell incurs annual fixed costs of $340,360. The current sales price is $91.
Note: The requirements of this question are interdependent. For example, the $268,000 desired to profit introduced in Requirement C also applies to subsequent requirements. Likewise, the $80 sales price introduced in requirement D applies to the subsequent requirements.
b) Determine the break-even points in units and dollars. Prepare an income statement using the contribution margin format.
c) Suppose that Campbell desires to earn a $268,000 profit. Determine the sales in units and dollars required to earn the desired profit. Prepare an income statement using the contribution margin format.
d) If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
e) If fixed costs drop to $288,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
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