Question
I am unsure I completed my homework correctly. Can you look over this assignment and let me know if it isn't correct? Kincaid Company sells
I am unsure I completed my homework correctly. Can you look over this assignment and let me know if it isn't correct?
Kincaid Company sells flags with team logos. Kincaid has fixed costs of $639,600 per year plus variable costs of $4.20 per flag. Each flag sells for $12.00.
Requirements
1. Use the equation approach to compute the number of flags Kincaid must sell each year to break even.
4. The company is considering an expansion that will increase fixed costs by 17% and variable costs by $0.60 per flag. Compute the new breakeven point in units and in dollars. Should Kincaid undertake the expansion? Give your reasoning.
(Round your final answers up to the next whole number.)
Requirement 1 (Net Sales Revenue - Variable Costs) - Fixed Costs = Target Profit
Show (in words) the Equation for Total Net Sales Revenue Contribution Margin=Net Sales Revenue-Variable Costs
Show (in words) 'Equation for Total Variable Costs Target Profit=Net Sales Revenue-Variable Costs-Fixed Cost
Rewrite the two above Equations to Simplify
Now include numbers for the Equation Above
Simplify
Using what you just input above, aglebraically solve for Units
(12 x Number of Flags)
;-(4.20 x Number of Flags) - 639,600
639,600 = [(12 - 4.20) x Number of Flags]
639,600 = 7.80 x Number of Flags
;= Number of Flags 82,000
Requirement 4
Calculate and Show Revised Variable Costs per Unit 4.20 per flag + 0.60 per flag = 4.80 per flag
Calculate and Show Revised Fixed Costs $639,600 x 1.17 = $748,332
(Net Sales Revenue - Variable Costs) - Fixed Costs = Target Profit
Show (in words) the Equation for Total Net Sales Revenue
Show (in words) 'Equation for Total Variable Costs
Rewrite the two above Equations to Simplify
Now include number for the Equation Above
Simplify
Using what you just input above, aglebraically solve for Units
(12 x Number of Flags)
;-(4.80 x Number of Flags) - 748,332
748,332 = [(12 - 4.80) x Number of Flags]
748,332 = 7.20 x Number of Flags
Number of Flags = 103,935
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