You have been provided with the following information regarding the Pharma Manufacturing Company: Sales Price$25Variable manufacturing cost per unit 12Variable marketing cost per unit 3Fixed manufacturing costs 180,000Fixed administrative costs 40,000This information is based on forecasted sales of 25,000 units.Required:(a) What are the expected operating profits for the upcoming year?(b) What is the break-even point in units?(c) What is the break-even point in dollars?(d) If $80,000 of operating profits is desired, how many units must be sold?(e) How much in sales dollars is required to generate operating profits of $75,000?
What will be an ideal response?
(a)
[($25 ? $12 ? $3) × 25,000] ? ($180,000 + $40,000) = $30,000.
(b)
$220,000/$10 = 22,000 units.
(c)
22,000 × $25 = $550,000.
(d)
($220,000 + $80,000)/$10 = 30,000 units.
(e)
($220,000 + $75,000)/$10 = 29,500 units × $25 = $737,500.
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