Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 (8 marks) The following budgeted information is available for SMJ Corp. (SMJ) for the upcoming year, based on sales of 80,000 units:
Question 1 (8 marks) The following budgeted information is available for SMJ Corp. (SMJ) for the upcoming year, based on sales of 80,000 units: Variable costs Sales $10,000,000 7,500,000 Contribution margin 2,500,000 1,500,000 Fixed costs Operating income $ 1,000,000 Required: a) Calculate SMJ's break-even point in units. (2 marks) b) Calculate SMJ's margin of safety in units. (1 mark) c) Determine how many more units (above the current volume) must be sold if SMJ wishes to increase operating income to $1,500,000. (2 marks) d) Assume that SMJ has an opportunity to enter a new market that would cost an additional $275,000 in fixed costs but would increase sales by 10%. Determine whether SMJ should enter into this opportunity. (3 marks)
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