Question
Kerry produces and sells a product that has variable costs of $28 and a selling price of $55 . Its current sales total $300,000 per
Kerry produces and sells a product that has variable costs of $28 and a selling price of $55 . Its current sales total $300,000 per month. Fixed manufacturing costs total $16,000 per month and fixed selling and administrative costs total $20,000 per month. The company is considering a proposal that will increase the selling price by 8%, increase the fixed manufacturing costs by 7%, and increase the fixed selling and administrative costs by $4,200.
A. Compute Kerry's current break-even point in units.
B. Compute Kerry's margin of safety in dollars.
C. Compute Kerrys net income.
D. Compute Kerrys breakeven point in units assuming they accept the proposal.
E. Compute Kerrys net income assuming they accept the proposal and sales total 4,000.
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