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PLEASE DO ALL QUESTION ASAP WILL RATE GOOD!! Bolger and Co. Manufactures large gaskets for the turbine industry. Bolger's per- unit sales price, variable costs,
PLEASE DO ALL QUESTION ASAP WILL RATE GOOD!!
Bolger and Co. Manufactures large gaskets for the turbine industry. Bolger's per- unit sales price, variable costs, and fixed costs for the current year are as follows: $300 Selling Price Per Unit Variable Cost Per Unit Fixed costs E 210 $3,600,000. Bolger's labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement. The controller performed a sensitivity analysis to determine the effect of a $10-per-unit direct labor increase and a $100,000 reduction in its fixed costs. 1. Explain the effect of the new labor agreement on Bolger's break-even point? Be sure to use computational proof and show your work. 2. Assuming Bolger wants a $1,000,000 profit after the new labor agreement, how many units above break-even point must it sell? Show your work and explain the results. 3. Assume now that there is a supply chain shortage and management estimates the most it can sell is 50,000 units. Explain the effects of this on Bolger's business and compute the new selling price needed to cover the new labor agreement and still maintain a $1,000,000 profit. Show your work. 4. Explain any issues you may see in Bolger setting the new price in #3. 5. Now assume that Bolger wants the $1,000,000 profit in #3 to be after-taxes and assume a tax rate of 20% Explain the effect this will have on selling price? Be sure to show your computation Step by Step Solution
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