Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Doral Company manufactures and sells pens. Currently, 5,200,000 units are sold per year at $0,50 per unit Fixed costs are $870,000 per year. Variable

image text in transcribed
image text in transcribed
The Doral Company manufactures and sells pens. Currently, 5,200,000 units are sold per year at $0,50 per unit Fixed costs are $870,000 per year. Variable costs are $0.30 per unit. Read the requirements. Requirement 1. What is the current annual operating income? (a) Start by determining the formula to calculate operating income. 1.(.N))Operatingincome The current annual operating income is (b) What is the current breakeven point in revenues? Determine the formula to calculate the breakeven point in revenues. The current breakeven point in revenues equal Compute the new operating income for requirements 2 through 4 Requirement 2. A 50.04 per unit increase in variable costs results in a new operating of Requirement 3. A 10% increase in fixed costs and a 10% increase in untis sold results in a new operating of Requirement 4. A 20% decrease in fixed costs, 20% decrease in selling price, a 30% decrease in variable cost per unit, and a 45% increase in units sold results in a new operating of The Doral Company manufactures and sells pens, Currently, 5,200,000 units are sold per year at $0.50 per unit. Fixed costs are $870,000 per year. Variable costs are $0.30 per unit. Read the requirements. (b) What is the current breakeven point in revenues? Determine the formula to calculate the breakeven point in revenues. 1= The current breakeven point in revenues equal Compute the new operating income for requirements 2 through 4 Requirement 2 . A $0.04 per unit increase in variable costs results in a new operating of Requirement 3. A 10% increase in foxed costs and a 10% increase in untis sold results in a new operating of Requirement 4. A 20% decrease in fixed costs, 20% decrease in selling price, a 30% decrease in variable cost per unit, and a 45% increase in units sold results in a new operating of Compute the new breakeven point in units for requirements 5 and 6 . Requirement 5. A 10% increase in fixed costs creates a new breakeven point at units Requirement 6. A 10% increase in selling price and a $40,000 increase in fixed costs creates a new breakeven point at units

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 Principles A Business Perspective Financial Accounting Chapters 9 To 18

Authors: Bill Buxton, Amy Sibiga

1st Edition

1461160863, 978-1461160861

More Books

Students also viewed these Accounting questions