Reference no: EM132644655

Pratt Company produces and sells disposable foil baking pans to retailers for $2.45 per pan. The variable costs per pan are as follows:

DM                              $0.27
DL                               0.58
Variable overhead           0.63
Selling                          0.17

Fixed manufacturing costs total $131,650 per year. Administrative costs (all fixed) total $18,350.

Required:

Question 1: Compute the number of pans that must be sold for Pratt to break even.

Question 2: How many pans must be sold for Pratt to earn a before-tax profit of $12,600?

Question 3: What is the unit variable cost? What is the unit variable manufacturing cost? Which is used in c-v-p analysis and why?

Question 4: Assuming a tax rate of 40%, how many pans must be sold to earn an after-tax profit of $25,200?