Determine air peanuts breakeven point in units

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Reference no: EM13536162

Breakeven point, what-if analysis Air Peanut Company manufactures and sells roasted peanut packets to commercial airlines. Following are the price and cost data per 100 packets of peanuts:

Estimated annual sales volume  11,535,700 packets

Selling price

$35.00

Variable costs:

 

Raw materials

$16.00

Direct labor

7

Manufacturing support

4

Selling expenses

1.6

Total variable costs per 100 packets

$28.60

Annual fixed costs:

 

Manufacturing support

$192,000

Selling and administrative

276,000

Total fixed costs

$468,000

Required

(a) Determine Air Peanut's breakeven point in units.

(b) How many packets does Air Peanut have to sell to earn $156,000?

(c) Air Peanut expects its direct labor costs to increase by 5% next year. How many units will it have to sell next year to break even if the selling price remains unchanged?

(d) If Air Peanut's direct labor costs increase by 5%, what selling price per 100 packets must it charge to maintain the same contribution margin-to-sales ratio?

Reference no: EM13536162

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