CVP AnalysisMissing Data

Durant Manufacturers has performed extensive studies on its costs and production and esti- mates the following annual costs based on 150,000 units (produced and sold):

Direct material. . . . . . . . . . . . . . . . . . . . . . . . . $100,000

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000

Manufacturing overhead . . . . . . . . . . . . . . . . . . 75,000

Selling, general, and administrative . . . . . . . . .50,000

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$315,000

Total Annual Costs (150,000 units)

1. Compute Durant's unit selling price that will yield a profit of $300,000, given sales of 150,000 units.
2. Compute Durant's dollar sales that will yield a projected 20 percent profit on sales, as- suming variable costs per unit are 60 percent of the selling price per unit and fixed costs are $420,000.
3. Management believes that a selling price of $8 per unit is reasonable given current mar- ket conditions. How many units must Durant sell to generate the revenues (dollar sales) determined in requirement (b)?