2.

value: 10.00 points

	Cost Structure
	Alternative #1			Alternative #2
Selling price per unit	$	50		$	50
Variable cost per unit		35			30
Short-term fixed costs/year		40,000			45,000

Required:

1.

What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same?

Sales volume (in units)

2.	Suppose your profit goal for the coming year is 10% of sales (i.e., operating profit sales = 10%). What sales level in units is needed under each alternative to achieve this goal?

	Alternative 1	Alternative 2
Required sales volume in dollars

3.	Suppose again that your profit goal for the coming year is 10% of sales. What sales volume in dollars is needed under each alternative to achieve this goal?

	Alternative 1	Alternative 2
Required sales volume in dollars