Question

Future Company wants to earn a net income of $250,000 next year. Its products are priced...

Future Company wants to earn a net income of $250,000 next year. Its products are priced at $300 per unit for the coming year. Product costs are as follows: Direct materials per unit of product $50 Direct labor per unit of product $100 Variable overhead per unit of product $12 Total fixed factory overhead $600,000 Variable selling expense is a commission of 5 percent of price. Fixed selling and administrative expense totals $300,000. Future Company has a tax rate of 35 percent. Based on the given information, calculate the number of units that will yield an operating income of $600,000. (Round answer to the nearest dollar.) a. $12,195 b. $11,300 c. $10,000 d. $12,000

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Calculation of Contribution margin per unit
Particulars $
Selling Price 300
Direct Materials 50
Direct Labor 100
Variable Overheads 12
Variable selling expenses (300*5%) 15
Contibution margin per unit (300 - 50 - 100 - 12 - 15) 123
Particulars $
Target Operating Income 600000
Add: Fixed selling and administration expenses 300000
Add: Fixed Factory Overheads 600000
Total Contribution 1500000
Contribution per unit 123
Number of units (1500000/123) 12195
Therefore the right answer is option (a) 12195 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
Head-First Company plans to sell 4,400 bicycle helmets at $72 each in the coming year. Product...
Head-First Company plans to sell 4,400 bicycle helmets at $72 each in the coming year. Product costs include: Direct materials per helmet $ 30 Direct labor per helmet 5.00 Variable factory overhead per helmet 4.50 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3.30 per helmet; fixed selling and administrative expense totals $28,500. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin...
Calculate the total variable cost per unit. Variable cost per unit Calculate the total fixed expense...
Calculate the total variable cost per unit. Variable cost per unit Calculate the total fixed expense for the year. Total fixed expense for the year Operating income Operating loss Sales Total contribution margin Total fixed cost Total variable cost Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet $ 30 Direct labor per helmet 8 Variable factory overhead per helmet 4 Total fixed factory overhead 20,000 Variable...
Units to Earn Target Income Head-First Company plans to sell 5,000 bicycle helmets at $75 each...
Units to Earn Target Income Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: Be sure to read the instructions on each panel for additional guidance. 1. Calculate the number of helmets Head-First must sell to earn operating income of $81,900....
Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and...
Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and 14,000 unit levels of production and sales for Earthen Products Inc.: Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75.00 Direct materials per unit . . . . ....
Dowell Company produces a single product. Its income statements under absorption costing for its first two...
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2016 2017 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative expenses 290,000 340,000 Net income $ 10,000 $ 260,000 Additional Information Sales and production data for these first two years follow. 2016 2017 Units produced 30,000 30,000 Units sold 20,000 40,000 Variable cost per...
Dowell Company produces a single product. Its income statements under absorption costing for its first two...
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2016 2017 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative expenses 290,000 340,000 Net income $ 10,000 $ 260,000 Additional Information Sales and production data for these first two years follow. 2016 2017 Units produced 30,000 30,000 Units sold 20,000 40,000 Variable cost per...
Degree of Operating Leverage Head-First Company plans to sell 5,000 bicycle helmets at $75 each in...
Degree of Operating Leverage Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $55 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $50,500. Required: 1. Calculate the degree of operating leverage. (Round your answer to the nearest tenth.) Impact of Increased Sales on Operating...
Dowell Company produces a single product. Its income statements under absorption costing for its first two...
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2016 2017 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative expenses 285,000 330,000 Net income $ 15,000 $ 270,000 Additional Information a. Sales and production data for these first two years follow. 2016 2017 Units produced 30,000 30,000 Units sold 20,000 40,000 b. Variable...
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit...
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even number of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units.
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit...
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even number of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT