1. Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 50...
Question:
1. Data for Hermann Corporation are shown below:
Per Unit | Percent of Sales | |
---|---|---|
Selling price | $ 50 | 100% |
Variable expenses | 28 | 56 |
Contribution margin | $ 22 | 44% |
Fixed expenses are $70,000 per month and the company is selling 4,000 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $11,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000?
1-b. Should the advertising budget be increased?
2. Mauro Products distributes a single product, a woven basket whose selling price is $10 per unit and whose variable expense is $8 per unit. The company’s monthly fixed expense is $2,200.
Required:
1. Calculate the company’s break-even point in unit sales.
2. Calculate the company’s break-even point in dollar sales.
3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales?
3. Lin Corporation has a single product whose selling price is $136 per unit and whose variable expense is $68 per unit. The company’s monthly fixed expense is $32,400.
Required:
1. Calculate the unit sales needed to attain a target profit of $5,000.
2. Calculate the dollar sales needed to attain a target profit of $8,400.
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer