Question
Memtech Company is the exclusive distributor of a high-speed computer memory chip. The product sells for $50 per unit and has a CM ratio of
Memtech Company is the exclusive distributor of a high-speed computer memory chip. The product sells for $50 per unit and has a CM ratio of 30%. The company's fixed expenses are $240,000 per year.
Required:
1.What are the variable expenses per unit?
variable expenses per unit.....................................
2.Using either the equation method or formula method:
a. What is the break-even point in units and in sales dollars?
break even point in units...............................
break even point in sales dollars.........................
b.What sales level in units and in sales dollars is required to earn an operating income of $75,000?
sales level in units......................
sales level in sales dollars.........................
c.Assume that through negotiation with the Memtech Company is able to reduce its variable expenses by $5 per unit. What is the company's new break-even point in units and in sales dollars?
break even point in units ....................
break even point in sales dollars............................
3.Referring to the original data, what sales level in dollars is required to earn an annual profit of $75,000 after taxes if the company's tax rate is 20%?
desired sales .......................
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started