Question
Can you show me the formula used in each question, and how you came up with the answer, I need to know if I am
Can you show me the formula used in each question, and how you came up with the answer, I need to know if I am using the correct formulas and plugging the right numbers into the equations, and the answer to compare if I come up with the same answers
Sales $36,750,000
Cost of goods
Variable $13,300,000
Fixed $9,300,000
Gross Margin $14,150,000
Selling & Administrative
Commissions $4,410,000
Fixed Marketing Expenses $1,350,000
Fixed Administrative $6,000,000
Net Operating Income $2,390,000
MODEL A MODEL B MODEL C
Normal Annual Sales Volume 16,000 19,000 1,000
Unit Selling Price $650 $750 $1100
Variable Expense per unit $250 $200 $500
Each of the following questions is independent of the others)
- What is the over-all break-even point in sales dollars?
- Assume that sales revenue remains constant, what is the impact on break-even and the margin of safety if there is an increases sales commission to 15%?
- If new equipment purchased for $1,200,000, will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. What will the new break-even point be?
- If invests an additional $650,000 in fixed marketing expenses, sales of the Model C are expected to increase by 8%. What is the break-even and margin of safety under these circumstances?
- If the projection is that sales will increase by 10% in the coming year, can the company afford to also increase commission from 12% to 15%? Why or why not.
- Assume that sales volume remains fixed but there is a 5% increase in variable expenses (materials cost) for the Model A and C, and a 10% increase in variable expenses for Model B. What is the new break-even?
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