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Problem 4 (5 points) Jake Company manufactures and sells a product with the following price and cost data for the year just ended: Selling price
Problem 4 (5 points) Jake Company manufactures and sells a product with the following price and cost data for the year just ended: Selling price $40 per unit Variable manufacturing costs $20 per unit Variable selling and administrative expenses $6 per unit Fixed manufacturing overhead $208,000 per year Fixed selling and administrative expenses $324,000 per year Required: Show all calculations. (See point allocation below; total 5 points) 1. Compute Jake Company's break-even point in units for the year just ended. (2 points) 2. Compute how many units need to be sold to earn an annual net operating income equal to 10% of sales during the year just ended? (1 points) 3. In the current year, Jake Company sold 43,000 units. Due to competition, Jake Co. will be forced to lower the selling price by 10% next year. How many units must be sold next year to earn the same income as was earned in the current year? (2 points)
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