Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows: Number of canoes produced and sold 500 700 850 Total

Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows:

Number of canoes produced and sold 500 700 850
Total costs
Variable costs $ 90,000 $ 126,000 $ 153,000
Fixed costs $ 119,000 $ 119,000 $ 119,000
Total costs $ 209,000 $ 245,000 $ 272,000
Cost per unit
Variable cost per unit $ 180.00 $ 180.00 $ 180.00
Fixed cost per unit 238.00 170.00 140.00
Total cost per unit $ 418.00 $ 350.00 $ 320.00

Sandy Bank sells its canoes for $475 each.

Required:

1. Suppose that Sandy Bank raises its selling price to $600 per canoe. Calculate its new break-even point in units and in sales dollars.

2. If Sandy Bank sells 1,550 canoes, compute its margin of safety in units and as a percentage of sales. (Use the new sales price of $600.)

3. Calculate the number of canoes that Sandy Bank must sell at $600 each to generate $120,000 profit.

  • Required 1

Suppose that Sandy Bank raises its selling price to $600 per canoe. Calculate its new break-even point in units and in sales dollars. (Do not round intermediate calculations. Round your final answers to nearest whole number.)

New Break-Even Units Canoes
Break-Even Sales Revenue

  • Required 2

If Sandy Bank sells 1,550 canoes, compute its margin of safety in units and as a percentage of sales. (Use the new sales price of $600.) (Round your answers to the nearest whole number.)

Margin of Safety
Percentage of Sales %

required 3

Calculate the number of canoes that Sandy Bank must sell at $600 each to generate $120,000 profit. (Do not round your intermediate calculations. Round your answer to the nearest whole number.)

Target Sales Units Canoes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Practical Guide To Auditing SAP Systems

Authors: Martin Metz, Sebastian Mayer

1st Edition

3960126409, 978-3960126409

More Books

Students also viewed these Accounting questions

Question

3. Keep families informed before problems develop.

Answered: 1 week ago