Question
Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 159,000 units (produced and sold): Total
Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 159,000 units (produced and sold):
Total Annual Costs (159,000 units) Direct material $ 295,000 Direct labor 264,000 Manufacturing overhead 223,000 Selling, general, and administrative 137,000 Total $ 919,000
)
Compute Durant's dollar sales that will yield a projected 22 percent profit on sales, assuming variable costs per unit are 50 percent of the selling price per unit and fixed costs are $616,000.
Management believes that a selling price of $7.50 per unit is reasonable given current market conditions. How many units must Durant sell to generate the revenues (dollar sales) determined in requirement (b)?
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