Compute number of sales units required to earn net income

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Reference no: EM131292968

ScholarPak Company produced and sold 79,000 backpacks during the year just ended at an average price of $39.00 per unit. Variable manufacturing costs were $16.50 per unit, and variable marketing costs were $3.78 per unit sold. Fixed costs amounted to $549,000 for manufacturing and $223,200 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.)

1. Compute the number of sales units required to earn a net income of $585,000 during the year.

2. ScholarPak’s variable manufacturing costs are expected to increase by 10 percent in the coming year. Compute the firm’s break-even point in sales dollars for the coming year.

3. If ScholarPak’s variable manufacturing costs do increase by 10 percent, compute the selling price that would yield the same contribution-margin ratio in the coming year.

Reference no: EM131292968

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