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Red Apple Company is considering the production and sale of a low-end cell phone. Expected selling price and summarized expected costs are provided below. Required:
Red Apple Company is considering the production and sale of a low-end cell phone. Expected selling price and summarized expected costs are provided below. Required: a) Calculate the break-even point in unit sales. b) Calculate the break-even point in sales dollars. c) Calculate the number of units that the company would need to sell to generate pre-tax operating income of $1,000,000. d) Calculate the amount of sales in dollars that would be needed to generate pre-tax operating income of $1,000,000. e) Company management is concerned that their estimates may not be conservative enough, so they decide to also plan around higher cost estimates. Recalculate the breakeven point in units and in dollars assuming the selling price remains the same, but variable costs per unit and total fixed costs are each 10% higher than the original model from parts a-d. Show all calculations. Units should not be shown as dollars or percentages, and should be rounded to whole numbers (because the company can't sell partial cell phones)
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