Question
UX Corporation sells a single product for $40. Its management estimates the following revenues and costs for the year 2020: Net sales $388,000 Selling expensesvariable
UX Corporation sells a single product for $40. Its management estimates the following revenues and costs for the year 2020:
Net sales | $388,000 | Selling expensesvariable | $21,100 | ||||
Direct materials | 85,400 | Selling expensesfixed | 20,100 | ||||
Direct labour | 56,400 | Administrative expensesvariable | 9,400 | ||||
Manufacturing overheadvariable | 21,700 | Administrative expensesfixed | 9,800 | ||||
Manufacturing overheadfixed | 9,700 |
a)Assuming fixed costs and net sales are spread evenly throughout the year, determine YUXs monthly break-even point in units and dollars
b) Calculate the contribution margin ratio, the annual margin of safety ratio, and the annual profit.
c)Determine the percentage increase in annual profits if YUX Corporation increases its selling price by 20% and all other factors (including demand) remain constant. (
d)Assume the price remains at $40 per unit and variable costs remain the same per unit, but fixed costs increase by 20% annually. Calculate the percentage increase in unit sales required to achieve the same level of annual profit calculated in part (b).
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