Question

ABC Company makes a product that has a $10 sales price and $4 of variable costs...

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

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

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

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Mickey Tire Company makes a special kind of racing tire. Variable costs are $230 per unit,...
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...
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...
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...
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...
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...
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...
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...
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...
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...
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
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT