Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $140 per unit and has a CM ratio of 40%.

Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $140 per unit and has a CM ratio of 40%. The companys fixed expenses are $441,000 per year. The company plans to sell 8,000 knapsacks this year.

Required:
1.

What are the variable expenses per unit?

2. Use the equation method for the following:

a.

What is the break-even point in units and in sales dollars?

b.

What sales level in units and in sales dollars is required to earn an annual profit of $105,000?

c.

What sales level in units is required to earn an annual after-tax profit of $105,000 if the tax rate is 25%?

d.

Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $7 per unit. What is the companys new break-even point in units and in sales dollars?(Do not round intermediate calculations. Round your final answers to the nearest whole number.)

3. Use the formula method for the following:

a.

What is the break-even point in units and in sales dollars?

b.

What sales level in units and in sales dollars is required to earn an annual profit of $105,000?

c.

What sales level in units is required to earn an annual after-tax profit of $105,000 if the tax rate is 25%?

d.

Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $7 per unit. What is the companys new break-even point in units and in sales dollars?(Do not round intermediate calculations. Round your final answers to the nearest whole number.)

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

Accounting For Governmental And Nonprofit Entities

Authors: Jacqueline Reck, Suzanne Lowensohn, Daniel Neely

19th Edition

1260118851, 9781260118858

More Books

Students also viewed these Accounting questions

Question

Find the median for the set of measurements 2, 9, 11, 5, 6, 27.

Answered: 1 week ago