Question
Campbell Company makes and sells products with variable costs 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 costs 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.
f) If variable cost rises to $30 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.
g) Assume that Campbell concludes that it can sell 10,800 units of product for $80 each. Recall that variable costs are $30 each and fixed costs are $288,000. Compute the margin of safety in units and dollars and as a percentage.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started