Exercise 3-8A (Algo) Target costing LO 3-2 The marketing manager of Solomon Corporation has determined that a market exists for a telephone with a sales price of $20 per unit. The production manager estimates the annual fixed costs of producing between 40,200 and 81,400 telephones would be $443,800 Required Assume that Solomon desires to earn a $131,000 profit from the phone sales. How much can Solomon afford to spend on variable cost per unit if production and sales equal 47,900 phones? Answer is complete but not entirely correct. Variable cost per unit 2003 Exercise 3-11A (Algo) Margin of safety LO 3-4 Solomon Company makes a product that sells for $34 per unit. The company pays $15 per unit for the variable costs of the product and incurs annual fixed costs of $163,400. Solomon expects to sell 21.200 units of product. Required Determine Solomon's margin of safety expressed as a percentage. (Round your answer to 2 decimal places. (.e., 0.2345 should be entered as 23.45)) Answer is complete but not entirely correct. Margin of safety 48 62 X % Exercise 3-10A (Static) Components of break-even graph LO 3-3 Refer the graph which shows the components of break-even. Required Match the numbers shown in the graph with the following items: Numbers a. b. Items Fixed cost line Total cost line Break-even point Area of profit Revenue line Area of loss Problem 3-20A (Algo) Determining the break-even point and preparing a break-even graph LO 3-1, 3-3 Reid Company is considering the production of a new product. The expected variable cost is $24 per unit. Annual fixed costs are expected to be $892.500. The anticipated sales price is $75 each. Required Determine the break-even point in units and dollars using each of the following: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. (Do not round Intermediate calculations. Round "Contribution margin ratio" to 1 decimal place. (.e., 0.234 should be entered as 23.4)) a Break even point in units Break even point in dollars b. Contribution margin per unit Break even point in units Break-even point in dollars C. Contribution margin ratio Break-even point in units Break-even point in dollars Thornton Company is considering adding a new product. The cost accountant has provided the following data: Expected variable cost of manufacturing Expected annual fixed manufacturing costs 48 per unit $ 65,000 The administrative vice president has provided the following estimates: Expected sales commission Expected annual fixed administrative costs $ 6 per unit $ 55,000 The manager has decided that any new product must at least break even in the first year. Required Use the equation method and consider each requirement separately. o. If the sales price is set at $74, how many units must Thornton sell to break even? b. Thornton estimates that sales will probably be 12.000 units What sales price per unit will allow the company to break even? c. Thornton has decided to advertise the product heavily and has set the sales price at $79. If sales are 9,000 units, how much can the company spend on advertising and still break even? a Number of units b. Sales price c. Advertising cost per unit