Our team is hired by Apple to help assess whether or not to continue to manufacture and sell an older model of the iPhone. Apple explains that this model continues to sell well in foreign markets but it worries that fixed costs are so large that it is difficult to earn a profit. The Tableau Dashboard is provided to aid our analysis of this model.

TOTAL FIXED COSTS:

factory expense = $10,250,000

production manager salaries = $8,500000

insurance expense = $6,000,000

equipment (straight-line) depreciation expense = $5,350,000

advertising expense = $5,000,000

VARIABLE COSTS PER UNIT:

battery = $10

camera = $45

internal components = $90

receiver = $35

screen = $95

speaker = $25

SALES PRICE PER UNIT:

iPhone sales price per unit is $750

Please complete the boxes as shown below.

1A.

2B.

1. Compute break-even point in units. Numerator: 1 Denominator: Fixed costs $ 35,100,000 / 2. Compute the units of product that must be sold to earn income of $9,000,000. Numerator: /Contribution margin per unit 1 Denominator: /Contribution margin per unit $ Sales per unit $ 44,000,000/ 3. Compute the dollar value of sales that must be sold to earn income of $9,000,000. Numerator: 1 1 Denominator: = = = = 60 = = = Break-Even Units Break-even units 0 Units to Achieve Target Units to achieve target 733,334 Dollar Value of Sales Dollar value of sales 0