Question
Detroit Disk, Inc. is a retailer for digital video disks. The projected net income for the current year is $2,710,000 based on a sales volume
Detroit Disk, Inc. is a retailer for digital video disks. The projected net income for the current year is $2,710,000 based on a sales volume of 290,000 video disks. Detroit Disk has been selling the disks for $21.00 each. The variable costs consist of the $8.00 unit purchase price of the disks and a handling cost of $2.00 per disk. Detroit Disks annual fixed costs are $480,000. | |||
1.) Calculate Detroit Disks break-even point for the current year in number of video disks. (Round your final answer up to nearest whole number.)
2.) What will be the companys net income for the current year if there is a 20 percent increase in projected unit sales volume?
4.) Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 20 percent. (Ignore income taxes.) |
In order to cover a 20 percent increase in the disks purchase price for the coming year and still maintain the current contribution-margin ratio, what selling price per disk must Detroit Disk establish for the coming year? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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