Question
Company A product sells for $50 and has a variable cost per unit of $30. Fixed Costs are $150,000 a. Compute for the breakeven pt.
Company A product sells for $50 and has a variable cost per unit of $30. Fixed Costs are $150,000
a. Compute for the breakeven pt.
b. Compute the number of units Company A must sell to earn $60,000 profit before tax
c. How much total cost sales must company a have to earn a $48,700 profit after tax assuming a tax rate of 40%
d. Company A has a target profit before tax of $50,000 and expects to sell 40,000 units. Compute the selling price Company A must charge to earn the target profit
e. Company A is considering the purchase of a new equipment that would increase fixed costs by $30,000 while reducing unit variable costs by $3 per unit.
f. What is the sales level that Company A will have indifference between the target
g. If company A wants to maintain its selling price at $50 per unit and earn 10% return on sales. Calculate the number of units Company A must sell to meet the target
h. Considering e. what is the margin of safety percentage
i. Considering 3 what is the degree of operating leverage
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