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Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows: Number of canoes produced and sold 550 750 900 Total
Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows:
Number of canoes produced and sold | 550 | 750 | 900 | ||||
Total costs | |||||||
Variable costs | $ | 112,750 | $ | 153,750 | $ | 184,500 | |
Fixed costs | $ | 148,500 | $ | 148,500 | $ | 148,500 | |
Total costs | $ | 261,250 | $ | 302,250 | $ | 333,000 | |
Cost per unit | |||||||
Variable cost per unit | $ | 205.00 | $ | 205.00 | $ | 205.00 | |
Fixed cost per unit | 270.00 | 198.00 | 165.00 | ||||
Total cost per unit | $ | 475.00 | $ | 403.00 | $ | 370.00 | |
Sandy Bank sells its canoes for $375 each.
Required:
1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars.
2. If Sandy Bank sells 1,600 canoes, compute its margin of safety in units and as a percentage of sales. (Use the new sales price of $500.)
3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $130,000 profit.
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