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The Stapleton Company manufactures and sells pens. Present sales output is 5,400,000 units per year at a selling price of $0.50 per unit. Fixed costs
The Stapleton Company manufactures and sells pens. Present sales output is 5,400,000 units per year at a selling price of $0.50 per unit. Fixed costs are $1,140,000 per year. Variable costs are $0.20 per unit. Required Requirement 1. (a) What is the present operating income for a year? Start by determining the formula to calculate operating income. [ Units sold x Selling price Variable costs D] Fixed costs = Operating income The current annual operating income is $ 480000 Requirement 1. (b) What is the present breakeven point in revenues? Determine the formula to calculate the breakeven point in revenues. Breakeven units Selling price Breakeven revenues The present breakeven point in revenues equals $ 684000 (Hold all decimals in interim calculations. Round your final answer to the nearest whole dollar.) i Required - X (Consider each case separately.) 1. a. What is the present operating income for a year? b. What is the present breakeven point in revenue? 2. Compute the new operating income for each of the following independent changes: a. A $0.10 per unit increase in variable costs. b. A 20% increase in fixed costs and a 20% increase in units sold. c. A 30% decrease in fixed costs, a 30% decrease in selling price, a 10% decrease in variable costs per unit, and a 40% increase in units sold. 3. Compute the new breakeven point in units for each of the following changes: a. A 20% increase in fixed costs. b. A 20% increase in selling price and a $10,000 increase in fixed costs. Print Done
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