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The following information was extracted from the accounting records of a local Bike Manufacturing Company: Sales price per unit $1,200 Variable manufacturing cost per unit
The following information was extracted from the accounting records of a local Bike Manufacturing Company: Sales price per unit $1,200 Variable manufacturing cost per unit $400 Variable Selling cost per unit $100 Total fixed costs $480,000 A. Calculate the break-even point in units and in $ amounts. [4 Marks B. How many units must be sold to earn an operating income of $80,000 ? [3 Marks] C. The marketing manager believes that a new machine would improve the quality of goods but will increase depreciation cost by $120,000, the sales price can be increased by 10 percent and the variable manufacturing costs will decrease by 20 percent. Calculate the new break-even point in units. [6 Marks] D. Using the information in part C, what sales level in dollars is needed to earn an operating income of $100,000 ? [3 Marks]
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