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Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $1,870,000 based on a sales volume
Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $1,870,000 based on a sales volume of 270,000 video disks. Disk City has been selling the disks for $22 each. The variable costs consist otthe $11 unit purchase price of the disks and a handling cost 0f$2 per disk. Disk City's annual xed costs are $560,000. Management is planning for the coming year, when it expects that the unit purchase price ofthe video disks will increase 30 percent. [Ignore income taxes.) Required: 1. Calculate Disk City's brea k-even point for the current year in number of video disks. [Round your nal answer up to nearest whole number.) 1 What will be the company's net income for the current year if there is a 10 percent increase in projected unit sales volume? 3. What volume of sales {in dollars} must Disk City achieve in the coming year to maintain the same net income as projected for the current year if the unit selling price remains at $22? {Do not round intermediate calculations. Round your nal answer to the nearest whole number.} 4. In order to cover a 30 percent increase in the disk's purchase price for the coming year and still maintain the current contribution margin ratio, what selling price per disk must Disk City establish for the coming year? [Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Net income Volume of sales Selling price per disk CollegePak Company produced and sold 80,000 backpacks during the yearjust ended at an average price of $40 per unit Variable manufacturing costs were $17.00 per unit, and variable marketing costs were $7100 per unit sold. Fixed costs amounted to $550,000 for manufacturing and $224,000 for marketing. There was no yearend workinprocess inventory. [Ignore income taxes.) Required: 1. Compute CollegePak's break-even point in sales dollars for the year. {Do not round intermediate calculations. Round your nal answer up to the nearest whole dollar.) 1 Compute the number of sales units required to earn a net income of $590,000 during the year. (Do not round intermediate calculations. Round your nal answer up to the nearest whole dollar.) 3- CollegePak's variable manufacturing costs are expected to increase by 10 percent in the coming year. Compute the rm's brea k even point in sales dollars for the coming year. (Do not round intermediate calculations. Round your nal answer up to the nearest whole dollar.} 4- If CollegePak's variable manufacturing costs do increase by 10 percent, compute the selling price that would yield the same contributionmargin ratio in the coming year. [Do not round intermediate calculations. Round your nal answer to 2 decimal placesJ Breakeven point Number of sales Breakeven point Selling price
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