Mathias Corporation manufactures and sells wire rakes. The rakes sell for $16 each. Information about the companys

Question:

Mathias Corporation manufactures and sells wire rakes. The rakes sell for $16 each. Information about the company’s costs is as follows:

Variable manufacturing cost per unit . . . . . . . . . . . . . . . . . $ 8

Variable selling and administrative cost per unit . . . . . . . . 4

Fixed manufacturing overhead per month . . . . . . . . . . $150,000

Fixed selling and administrative cost per month . . . . . ... 350,000

a. Determine the company’s monthly break-even point in units.

b. Determine the sales volume (in dollars) required for a monthly operating income of $100,000.

c. Compute the company’s margin of safety if its current monthly sales level is $3,800,000.

d. Estimate the amount by which monthly operating income will increase if the company anticipates a $200,000 increase in monthly sales volume.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...