Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I attended our industry's showcase conference last month and learned that Chester is updating their pricing strategy for their product City. Early intel suggests

image text in transcribedimage text in transcribed

I attended our industry's showcase conference last month and learned that Chester is updating their pricing strategy for their product City. Early intel suggests that they'll drop the price $1.80. They'll likely continue to keep both material and labor costs consistent at $6.90 and $9.32 per unit respectively, and I want us to better understand what their break-even point is. How many units (000) of City must they sell to break even? You can expect their period costs to stay consistent with the Income Statement available in your Drive. Thanks in advance! Sincerely, Sanjay Sanjay Singh Board Member, Operations | Andrews Corporation 936 units 720 units 1155 units 244 units Sales Variable Costs Direct Material Direct Labor Inventory Carry Total Variable Costs (Labor, Material, Carry) Contribution Margin Period Costs City Cid Coat Cozy Cat Creak Total $15,030 $27,356 $38,477 $26,979 $34,485 $33,861 $176,189 $5,216 $6,952 $16,027 $12,766 $12,912 $14,810 $68,683 $6,673 $8,935 $11,443 $6,973 $10,202 $7,166 $51,393 $333 $168 $685 $429 $472 $0 $2,087 $12,223 $16,055 $28,155 $20,168 $23,586 $21,976 $122,163 $2,807 $11,301 $10,322 $6,811 $10,899 $11,885 $54,026 Industry Avg Percentage $163,344 100% $60,670 $43,734 39% 29.2% $1,312 1.2% $105,716 69.3% $57,629 30.7% Depreciation $1,489 $2,904 $1,430 $1,401 $1,835 $1,479 $10,538 $11,380 6% SG&A R&D Promotions Sales Administration Total Period Costs Net Margin $79 $829 $1,000 $924 $903 $979 $4,715 $959 $1,159 $1,388 $1,388 $1,388 $1,388 $7,668 $784 $1,259 $1,338 $1,338 $1,338 $1,338 $7,393 $132 $241 $339 $238 $304 $298 $1,553 $3,443 $6,391 $5,495 $5,289 $5,768 $5,482 $31,867 ($636) $4,910 $4,827 $1,523 $5,131 $6,403 $22,158 Other Expenses $5,573 EBIT $16,585 Short-Term Interest $1,571 $2,944 2.7% $6,909 4.4% $7,170 4.2% $1,338 0.9% $29,741 18.1% $27,887 12.6% $5,885 3.2% $22,002 9.4% $1,529 0.9% Long-Term Interest $6,186 Taxes & Tariffs $3,090 $6,435 3.5% $4,913 1.8% Profit Sharing $115 $182 0.1% Net Profit $5,624 $8,942 3.2%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Managerial Accounting Concepts

Authors: Edmonds, Tsay, olds

6th Edition

71220720, 78110890, 9780071220729, 978-0078110894

More Books

Students also viewed these Accounting questions

Question

Are the hours flexible or set?

Answered: 1 week ago

Question

Explain all drawbacks of the application procedure.

Answered: 1 week ago

Question

Determine Leading or Lagging Power Factor in Python.

Answered: 1 week ago

Question

In what ways are the elderly vulnerable?

Answered: 1 week ago

Question

What is community psychology?

Answered: 1 week ago