Question

ABC Company makes a product that has a $10 sales price
and $4 of variable costs . It has just found out that its fixed
costs will increase by $9,000 per month . How many additional units
of its product must it sell to continue to make its usual net
operating income?

a. 3000

b. 2250

c. 900

d. 1500

Answer #1

Answer is as follows:

Correct Option : d.1500

Contribution Margin per unit = Sales price - Variable cost

= $10 - $4 = $6

Additional units that must be sell in order to make its usual net operating income : It means only to compensate the increased fixed costs without change in net operating income, the number of units that must be sell

= Increased Fixed Costs / Contribution margin per unit

= $9000 / $6

Additional units required to sell = 1500 units

Mickey Tire Company makes a special kind of racing tire.
Variable costs are $230 per unit, and fixed costs are $20,000 per
month. Mickey sells 300 units per month at a sales price of $350.
If the quality of the tire is upgraded, the company believes it can
increase the sales price to $380. If so, the variable cost will
increase to $250 per unit, and the fixed costs will rise by 15%. If
Mickey decides to upgrade, how will...

company has variable costs of $34.50, total fixed costs of
$21,700,000 and plans to sell its product for $45.00. In 2018 it
sold 2,400,000 units of product. Required: e) what is the operating
leverage in 2018; f) the production manager wants to automate
production and lower variable costs by $3 per unit and spend an
additional $4,500,000 fixed costs per year- is this more
profitable? g) The sales manager wants to drop prices by $2.50 per
unit and spend an...

4. A company that makes optical computer input devices has
calculated their revenue and costs as follows for the most recent
fiscal period:
Sales $522 000
Costs:
Fixed Costs $145 000
Variable Costs 208 800
Total Costs 353 800
Net Income $168 200
What is the break-even point in sales dollars?
5. A company that makes environmental measuring devices has
calculated their revenue and costs as follows for the most recent
fiscal period:
Sales $750 000
Costs:
Fixed Costs $200...

ABC Company sells three products with exactly the same price of
$20 a unit. However, A’s variable cost is at 40%, B’s at 50%, and
C’s at 60%. Sales mix for A, B, and C is at 500, 1500, and 3000
units respectively. Fixed costs amount to $18,000. Breakeven sales
for B should be a. 600 b. 1,200 c. 1,800 d. 2,000
ABC’s sales mix has drastically changed due to market conditions
to 3000, 1500, and 500 units for A,...

ABC Inc. manufactures and sell product A. The sale price and
costs on a per unit basis, when
20,000 units
per month
are sold, are as follows:
Manufacturing costs:
Direct materials used
$2.00
Direct labour
$1.00
MOH variable
$1.20
MOH fixed
$1.10
Selling expenses
Variable
$4.00
Fixed
$1.10
Sale price per unit
$15
c.
ABC Inc. received a special order from Africa Co., headquarter
located in
Zimbabwe, for 5,000 units at 6 $ each. The variable selling
expenses on this...

ABC Company makes 40,000 units per year of a part it uses in
the
products it manufactures. The per unit product cost of this
part
is shown below:
direct materials .............. $15.30
direct labor .................. 24.70
variable overhead ............. 2.10
fixed overhead ................ 27.40
total ......................... $69.50
An outside supplier has offered to sell ABC Company 40,000
units
of this part a year for $66.10 per unit. If ABC Company
accepts
this offer, the facilities now being used to make...

Each month Perry Company produces 9,000 units of a product that
has variable costs of $12 per unit. Total fixed costs for the month
are $36,000. A special order is received which is for 1,000 units
at a price of $13 per unit. Relevant to the decision of whether to
accept or reject this special order is the:
a. Old fixed cost per unit of $4.00
b. New fixed cost per unit of $3.60
c. Difference between the offered price...

Metal Industries has monthly fixed costs totaling $90,000 and
variable costs of $5 per unit. Each unit of product is sold for
$20.
Assume the company expects to sell 11,850 units of product this
coming month. What is the margin of safety in units?
Group of answer choices
8,850
6,600
5,850
7,350
Tech Products, Inc. has monthly fixed costs totaling $90,000 and
variable costs of $5 per unit. Each unit of product is sold for
$20.
How many units must...

1. A company's product sells for $150 and has variable
costs of $60 associated with the product. What is its contribution
margin per unit?
a. $150
b. $90
c. $60
d. $40
2. A company's contribution margin per unit is $25. If
the company increases its activity level from 200 units to 350
units, how much will its total contribution margin
increase?
a. $1,250
b. $8,750
c. $3,750
d. $5,000
3. If a company has fixed costs of $6,000 per...

Sequoah Company sells its product for $58 and has variable costs
of $30 per unit. The total fixed costs are $40,000. What will be
the effect on the breakeven point in units if variable costs
increase by $6 due to an increase in the cost of direct
materials?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 11 minutes ago

asked 33 minutes ago

asked 41 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago