The senior management of the company "Sales & Sales, S.A." asked the accounting department to issue a report on the last year of operations and the following information was determined.
 

Sales: $1,000,000
Purchase Cost (variable costs): (560,000)
Production Contribution Margin: 440,000
Selling expenses (freight): (20,000)
Total contribution margin: 420,000
Fixed Cost

Of production: $480,000
Administration and sales: $170,000
= (650,000)
Profit before taxes: (230,000)
Taxes (40%) (only if there is profit): (0)
Net profit: $(230,000)
 

It is known that for each unit sold there is a production contribution margin equal to $88 and that only 40% of the sales went to Mexico City, so an amount had to be paid for each unit shipped. The rest was sold in Monterrey and did not
required no extra expense.

It is requested:
1. The break-even point in pesos and in units if everything was sold in CDMX.
 

2. The break-even point in pesos and in units if everything were sold in Monterrey.
 

3. If the original sales level in units were maintained and everything was sold in CDMX, What price would "Sales & Sales, S.A." to have an after-tax profit of $290,000?
 

4. If we maintained the original sales level in units (Mty and CDMX), what price would "Sales & Sales, S.A." to have an after-tax profit of $250,000?

 

Answer rating: 100% (QA)

To answer the questions we need to calculate the breakeven points and the selling price required to achieve specific aftertax profits Lets proceed ste... View the full answer