When studying a project, the following variable costs were estimated for a normal production capacity of 140,000
Question:
When studying a project, the following variable costs were estimated for a normal production capacity of 140,000 units, with a maximum capacity of 200,000 units:
Materials $120,000
Labor $300,000
Other $80,000
Fixed costs are estimated, according to the level of production, in:
Production | Fixed Cost |
0 – 40,000 | $320,000 |
40,001 – 130,000 | $380,000 |
130,001 – 180,000 | $420,000 |
180,001 – 200,000 | $500,000 |
If the selling price of each unit is $15 and the expected production is 100,000 units per year, what is the minimum number of additional units that need to be sold at the price of $11 per unit to show a profit of $762,000 per year? To raise sales to 120,000 units per year, how much could be spent additionally in advertising (fixed cost) so that by maintaining a price of $15, a profit of 20% on sales?
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison And Eric Noreen And Peter Brewer