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Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 3,300,000 p per year.
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 3,300,000 p per year. The variable cost of each component is 1,000 p, and the components are sold for 3,200 p each. The company sold 5,900 components during the prior year. ( p denotes the peso, Argentina's national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth US\$0.104. In the following requirements, ignore income taxes.) Required: 1. Compute the break-even point in units. Note: Round your answer to the nearest whole number. 2. What will the new break-even point be if fixed costs increase by 10 percent? Note: Round your answer to the nearest whole number. 3. What was the company's net income for the prior year? 4. The sales manager believes that a reduction in the sales price to 2,700p will result in orders for 600 more components each year. What will the break-even point be if the price is changed? Note: Round your answer to the nearest whole number. 5. Should the price change discussed in requirement 4 be made? Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 3,300,000 p per year. The variable cost of each component is 1,000 p, and the components are sold for 3,200 p each. The company sold 5,900 components during the prior year. ( p denotes the peso, Argentina's national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth US\$0.104. In the following requirements, ignore income taxes.) Required: 1. Compute the break-even point in units. Note: Round your answer to the nearest whole number. 2. What will the new break-even point be if fixed costs increase by 10 percent? Note: Round your answer to the nearest whole number. 3. What was the company's net income for the prior year? 4. The sales manager believes that a reduction in the sales price to 2,700p will result in orders for 600 more components each year. What will the break-even point be if the price is changed? Note: Round your answer to the nearest whole number. 5. Should the price change discussed in requirement 4 be made
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