Breakeven point, what-if analysis Air Peanut Company manufacture

Breakeven point, what-if analysis Air Peanut Company manufactures and sells roasted peanut packets to commercial airlines. Following are the price and cost data per 100 packets of peanuts:

Estimated annual sales volume = 11,535,700 packets Selling price $35.00 Variable costs: Raw materials $16.00 Direct labo

(a) Determine Air Peanut's breakeven point in units.
(b) How many packets does Air Peanut have to sell to earn $156,000?
(c) Air Peanut expects its direct labor costs to increase by 5% next year. How many units will it have to sell next year to break even if the selling price remains unchanged?
(d) If Air Peanut's direct labor costs increase by 5%, what selling price per 100 packets must it charge to maintain the same contribution margin-to-salesratio?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...


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