Reference no: EM133064222

Question - CollegePak Company produced and sold 81,000 backpacks during the year just ended at an average price of $41 per unit. Variable manufacturing costs were $17.50 per unit, and variable marketing costs were $6.28 per unit sold. Fixed costs amounted to $551,000 for manufacturing and $224,800 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.)

Required -

1. Compute CollegePak's break-even point in sales dollars for the year.

2. Compute the number of sales units required to earn a net income of $595,000 during the year.

3. CollegePak'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.

4. If CollegePak'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.