Compute the volume in units and the dollar sales

Assignment Help Accounting Basics

Reference no: EM132086359

Question: Would appreciate help with step by step instructions/example of how to calculate the solution for the following problem. I've worked out the first part (a), however, my answer, Sales Volume Units: 60434.9 & Sales: $1994351.70, is incorrect .

Argentina Partners is concerned about the possible effects of inflation on its operations. Presently, the company sells 65,000 units for $30 per unit. The variable production costs are $16, and fixed costs amount to $750,000. Production engineers have advised management that they expect unit labor costs to rise by 20 percent and unit materials costs to rise by 10 percent in the coming year. Of the $16 variable costs, 45 percent are from labor and 20 percent are from materials. Variable overhead costs are expected to increase by 25 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 6 percent as a result of increased taxes and other miscellaneous fixed charges.

The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year.

Required: a. Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming that the maximum price increase is implemented. (Do not round intermediate calculations. Round up your answer for "Volume in units" to the nearest whole number and round your answer for "Sales" to the nearest whole dollar amount.)

b. Compute the volume of sales and the dollar sales level necessary to provide the 8 percent increase in profits, assuming that the maximum price increase is implemented. (Do not round intermediate calculations. Round up your answer for "Volume in units" to the nearest whole number and round your answer for "Sales" to the nearest whole dollar amount.)

c. If the volume of sales were to remain at 65,000 units, what price increase would be required to attain the 8 percent increase in profits? Calculate the new price. (Round your answer to 2 decimal places.)

Reference no: EM132086359

Questions Cloud

What is the cost of goods manufactured : Work in process inventory on December 31 is $42,000. Work in process inventory decreased by 40% during the year. Total manufacturing costs incurred amount.

Evaluate the explanation provided by baker : You are working on a part of a repeat audit of a client with a September 30 fiscal year end. The client company is in the insurance brokerage industry.

Record the transactions in general journal form : As of July 1, 2014, the City of Saratoga Springs decided to purchase a privately operated swimming pool and to create a Swimming Pool (Enterprise) Fund.

How would you adjust beginning retained earnings : How would you adjust beginning retained earnings if you have an overstatement of p/y depreciation. Say, beginning RE is 250,000 and overstatement.

Compute the volume in units and the dollar sales : Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming that the maximum price increase is implemented.

Compose and key an e-mail message : Using your Office 365 Word program, open up a new word processing document. Compose and key an e-mail message to Lionel that is appropriate for the situation.

What he refers to as internal control deficiencies : You are working on the Bemco audit. Assume that each of the four sections of this question are unrelated. Bill Wedman, another staff member.

Find the total amount of interest client will earn : Find the total amount of interest client will earn (from the time they start contributing to the account to when they make the last withdrawal).

What you would do prior to your arrival : You are working 10 to 12 hours a day for a multinational corporation called MNE, Inc. at its US headquarters. MNE is a publicly listed company.

User Account

All Pages