Answered step by step
Verified Expert Solution
Question
1 Approved Answer
REVIEW PROBLEM Breakeven/Profit Planning Analysis Instrument City, Inc., is a major producer of pipe organs. Its Model D14 is a double-man- ual organ with a
REVIEW PROBLEM Breakeven/Profit Planning Analysis Instrument City, Inc., is a major producer of pipe organs. Its Model D14 is a double-man- ual organ with a large potential market. On the next page is a summary of data from 20x1 operations for Model D14. Variable costs per unit Direct materials $ 2,300 Direct labor 800 Manufacturing overhead 600 Selling expense 500 Total fixed costs Manufacturing overhead 195,000 Advertising 55,000 Administrative expense 68,000 Selling price per unit 9,500 1. Compute the 20xl breakeven point in units. 2. Instrument City sold sixty-five D14 models in 20xl. How much net income did the firm realize? 3. Management is considering alternative courses of action for 20x2. (Use the figures from 2 and treat each alternative independently.) a. Calculate the number of units that must be sold to generate a net income of $95,400. Assume that costs and selling price remain constant. alculate the net income if the company increases the number of units sold by 20 percent and cuts the selling price by $500 per unit. c. Determine the number of units that must be sold to break even if advertising is increased by $47,700. d. If variable costs are cut by 10 percent, find the number of units that must be sold to generate net income of $125,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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