How much revenue must floatem generate to break even

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Reference no: EM131294147

Floatem Boats is a small boat manufacturer. Michael Hughes, the company's president, is currently evaluating the company's performance and is considering options that might be effective at increasing Floatem's profitability. The company's controller, Tobi Leung, has prepared the following cost and expense estimates for next year, on the basis of a sales forecast of $3,110,000:

Direct materials $769,000

Direct labor 698,000

Factory overhead 728,000

Selling expenses 282,000

Other administrative expenses 92,000

2,569,000

After Michael received and reviewed the cost and expense estimates, he realized that Tobi had given him all the data without breaking it out into fixed and variable components. He called her, and she told him the following: "Factory overhead and selling expenses are 39 percent variable, but other administrative expenses are 20 percent variable." If required, round all interim calculations to two decimal places (including percentages .2567 = 25.67%) and use your rounded number in subsequent calculations. Round your answers to the nearest whole number.

Required:

A. How much revenue must Floatem generate to break even? $ ?

B. Michael Hughes has set a target profit of $698,000 for next year. How much revenue must Floatem generate to achieve Michael's goal? $ ?

Reference no: EM131294147

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