Question
Mathias Corporation manufactures and sells wire rakes. The rakes sell for $20 each. Information about the companys costs is as follows: Variable manufacturing cost per
Mathias Corporation manufactures and sells wire rakes. The rakes sell for $20 each. Information about the companys costs is as follows:
Variable manufacturing cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9
Variable selling and administrative cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . $4
Fixed manufacturing overhead per month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000
Fixed selling and administrative cost per month . . . . . . . . . . . . . . . .. . . . . . . . . . . $350,000
a. Determine the companys monthly break-even point in units.
b. Determine the sales volume (in dollars) required for a monthly operating income of $100,000.
c. Estimate the amount by which monthly operating income will increase if the company anticipates a $200,000 increase in monthly sales volume.
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