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Cool Beverage Inc. is a manufacturer of under counter beverage refrigerators. Cool Beverage's current model has following costs and selling price. Selling Price $400 per
Cool Beverage Inc. is a manufacturer of under counter beverage refrigerators. Cool Beverage's current model has following costs and selling price. Selling Price $400 per unit Variable manufacturing costs $220 per unit Fixed manufacturing costs $280,000 per year Variable selling expenses $ 40 per unit Fixed selling expenses $140,000 Required: 1. Determine the breakeven point in units and sales dollars. (2 points). 2. Determine the number of units that must be sold to earn $151,200 after tax of 28 percent. (2 points) 3. If budgeted pre-tax operating income is $210,000 what is the margin of safety in units? (2 points) 4. If pre-tax operating income is $210,000 Determine the operating leverage factor? (2 points) b. What would be the percent increase in profit if sales increased by 10 percent? (1 point) a. 5. Cool Beverage is considering the introduction of an under counter icemaker marketed to the residential homeowner market. Cool Beverage estimates the icemaker would have a selling price of $750 with variable manufacturing cost of $310 and variable selling expenses of $60 per icemaker. In addition, Cool Beverage management estimates that it will incur an additional $72,000 in annual fixed cost related to the ice maker. Management estimates that they will sell 3 units of the existing beverage refrigerator for every one unit of the new icemaker. What would be Cool Beverage's breakeven point in number of units of each product at the planned product mix? (3 points)
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