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 expenses—variable		$21,100
Direct materials		85,400		Selling expenses—fixed		20,100
Direct labour		56,400		Administrative expenses—variable		9,400
Manufacturing overhead—variable		21,700		Administrative expenses—fixed		9,800
Manufacturing overhead—fixed		9,700

a)Assuming fixed costs and net sales are spread evenly throughout the year, determine YUX’s 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).

Answer 1