Halifax Products sells a product for $75. Variable costs per unit are $50, and monthly fixed costs are $75,000. Answer the following questions:a. What is the break-even point in units?b. How many units would need to be sold to earn a target profit of $200,000?c. Assuming they achieve the level of sales required in part b, what is the margin of safety in sales dollars?
What will be an ideal response?
a. 3,000 units = $75,000/($75 - $50)
b. 11,000 units = ($75,000 + $200,000)/($75 - $50)
c. $600,000 = (11,000 units - 3,000 units) × $75
Break-even units = Fixed costs / Unit contribution margin. Target units = (Fixed costs + Target profit) / Unit contribution margin. Margin of safety = Actual sales - Break-even sales.
You might also like to view...
________ is the last phase of the listening process.
A. Attending B. Responding C. Comprehending D. Hearing
Jack Gangi sells ad space for companies that wish to advertise on buses. As he is selling ad space to a local art gallery owner, he closes by saying, "Since you know so much more about color and design than I do, I can learn a lot working with you developing this ad." This is an example of a(n) ________ close.
A. minor-points B. standing-room-only C. alternative-choice D. summary-of-benefits E. compliment
Your uncle would like to restrict his interest rate risk and his default risk, but he would still like to invest in corporate bonds. Which of the bonds listed below best satisfies your uncle's criteria?
A. An AAA bond with 10 years to maturity B. A BBB perpetual bond C. A BBB bond with 10 years to maturity D. An AAA bond with 5 years to maturity E. A BBB bond with 5 years to maturity
Nissley Wedding Fantasy Corporation makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system:Activity Cost Pools Activity RateSize-related$1.13per guestComplexity-related 28.22per tierOrder-related$74.72per orderThe measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do
not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.Data concerning two recent orders appear below: Tijerina WeddingTwersky WeddingNumber of reception guests 49 126Number of tiers on the cake 2 4Cost of purchased decorations for cake$28.60$54.64Assuming that the company charges $465.39 for the Twersky wedding cake, what would be the overall margin on the order? A. $80.77 B. $135.41 C. $384.62 D. $155.49