Question

You have been provided with the following information regarding the Omaha Manufacturing Company: Sales price $50...

You have been provided with the following information regarding the Omaha Manufacturing Company:

Sales price $50
Variable manufacturing cost per unit 24
Variable marketing cost per unit 6
Fixed manufacturing costs 360,000
Fixed administrative costs 80,000


This information is based on forecasted sales of 30,000 units.

Required:

(a) What is the expected operating profit for the upcoming year?
(b) What is the break-even point in units?
(c) If $180,000 of operating profit is desired, how many units must be sold?

Business   Accounting   
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Homework Answers

Answer #1

(a) What is the expected operating profit for the upcoming year?

Sales (30000*50) 1500000
Less: Variable manufacturing cost (30000*24) (720000)
Less: Variable marketing cost (30000*6) (180000)
Contribution margin 600000
Less: Fixed manufacturing cost (360000)
Less: Fixed administrative cost (80000)
Net operating income 160000

2. Break even point = (360000+80000)/(50-30) = 22000 units

3. Required sales units = (360000+80000+180000)/20 = 31000 units

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