Question

Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 151,000 units (produced and sold):

Total Annual Costs (151,000 units) |
|||

Direct material | $ | 298,000 | |

Direct labor | 258,000 | ||

Manufacturing overhead | 209,000 | ||

Selling, general, and administrative | 149,000 | ||

Total | $ | 914,000 | |

**Required:**

**a.**
Compute Breed’s unit selling price that will yield a profit of
$596,000, given sales of 151,000 units. **(Round your answer
to 2 decimal places.)**

**b.**
Compute Breed’s dollar sales that will yield a projected 26 percent
profit on sales, assuming variable costs per unit are 54 percent of
the selling price per unit and fixed costs are $424,000.

**c.**
Management believes that a selling price of $7.60 per unit is
reasonable given current market conditions. How many units must
Breed sell to generate the revenues (dollar sales) determined in
requirement (*b*)? **(Round your final answer to
nearest whole unit.)**

Answer #1

Req a: | ||||

Total cost of 151000 units | 914000 | |||

Add: Desired profits | 596000 | |||

Target sales in $ | 1510000 | |||

Divide: Number of units | 151000 | |||

Unit Sellig price | 10 | |||

Req b: | ||||

Fixed cost: 424000 | ||||

Variable cost % of sales | 54% | |||

Profit % of sales | 26% | |||

Remaining % on sales for Fixed cost | 20% | |||

(100-54-26) | ||||

Total saless in $: 424000 /20 *100 = $ 2120,000 | ||||

Req c: | ||||

Total Sales revenue required | 2120000 | |||

Divide: Selling price | 7.6 | |||

Sales units required | 278948 | units | ||

Breed Products has performed extensive studies on its costs and
production and estimates the following annual costs based on
154,000 units (produced and sold):
Total Annual Costs
(154,000 units)
Direct material
$
291,000
Direct labor
261,000
Manufacturing overhead
207,000
Selling, general, and administrative
132,000
Total
$
891,000
Required:
a. Compute Breed’s unit selling price that will
yield a profit of $448,800, given sales of 154,000 units.
(Round your answer to 2 decimal places.)
b. Compute Breed’s dollar sales that will...

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