Reference no: EM132622917
Question -
Q1. Two products have the following selling prices and variable costs:
|
|
Q
|
Y
|
|
Unit Selling Price
|
$100.00
|
$130.00
|
|
Unit Variable Cost
|
85.00
|
95.00
|
|
UCM
|
$15.00
|
$35.00
|
|
UCM Ratio
|
15/100
|
35/130
|
|
|
15.00%
|
26.92%
|
Five Units of Q are sold for every 4 units of Y. Total annual fixed costs are $80,600.
Required - How many units of product must be sold to earn 100,000 of operating income?
Q2. Air Company sells its product for $100 per unit. Estimated costs for October 20Y9 are as follows:
Cost Variable product costs per unit $50 Variable sales commission per unit 20% of selling price Total fixed production overheads $20,000 Total fixed administrative salaries $10,000
Required -
a) Calculate the Unit Contribution Margin (Hint - you will need to identify the company's variable costs).
b) Calculate the company's Break-even units and Break-even Dollars.
c) How many units must be sold during October to earn a profit of $10,000?
d) Assume that sales commission is now $10 for every unit sold. Calculate revised break-even point units.