Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ozark Metal Co. makes a single product that sells for $43.5 per unit. Variable costs are $29.4 per unit, and fixed costs total $65,215

image text in transcribedimage text in transcribed

Ozark Metal Co. makes a single product that sells for $43.5 per unit. Variable costs are $29.4 per unit, and fixed costs total $65,215 per month. Required: a. Calculate the number of units that must be sold each month for the firm to break even. b. Assume current sales are $401,000. Calculate the margin of safety and the margin of safety ratio. c. Calculate operating income if 6,500 units are sold in a month. d. Calculate operating income if the selling price is raised to $46.5 per unit, advertising expenditures are increased by $8,000 per month, and monthly unit sales volume becomes 7,200 units. e. Assume that the firm adds another product to its product line and that the new product sells for $21 per unit, has variable costs of $15 per unit, and causes fixed expenses in total to increase to $88,000 per month. Calculate the firm's operating income if 6,500 units of the original product and 4,200 units of the new product are sold each month. For the original product, use the selling price and variable cost data given in the problem statement. f. Calculate the firm's operating income if 3,300 units of the original product and 7,400 units of the new product are sold each month. g. Why operating income is different in parts e and f, even though sales totaled 10,700 units in each case. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required R Required C Required D Required F Required F Required G

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

Interpreting and Analyzing Financial Statements

Authors: Karen P. Schoenebeck, Mark P. Holtzman

6th edition

132746247, 978-0132746243

More Books

Students also viewed these Accounting questions

Question

Find the numerical value of:

Answered: 1 week ago