Break$-$Even Units: Units for Target Profit

Jay$-$Zee Company makes an in$-$car navigation system. Next year, Jay$-$Zee plans to sell $19,000$ units at a price of $$360$ each. Product costs include:

Direct materials $$76\mathrm{.}00$

Direct labor $$43\mathrm{.}00$

Variable overhead $$11\mathrm{.}00$

Total fixed factory overhead $$716,600$

Variable selling expense is a commission of $4$ percent of price; fixed selling and administrative expenses total $$82,600.$

Required:

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$1.$ Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations.

$fill in the blank $224805034$ffefad$\_1$

$14$

per unit

Calculate the contribution margin per unit.

$fill in the blank $224805034$ffefad$\_2$

$216$

per unit

$2.$ How many units must Jay$-$Zee Company sell to break even? Round your answer to the nearest whole number.

fill in the blank $224805034$ffefad$\_3$

$3,700$

units

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Feedback

$1.$ Sales commissions usually are a percentage of price.

See Cornerstone $16\mathrm{.}2.$ Price is a part of the calculation.

$2.$ Break$-$even in units can be calculated by taking fixed costs$/$contribution margin per unit

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Prepare an income statement for the calculated number of units. If an amount is zero, enter $"0".$ Do NOT round Break$-$even units and, if required, round your answer to the nearest dollar.

blank

Jay$-$Zee Company

Income Statement

Sales

$Sales

$281,200$

Less: Variable expenses

Less: Variable expenses

Contribution margin

$Contribution margin

Less: Fixed expenses

Less: Fixed expenses

Operating income

$Operating income

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Feedback

Remember to use a contribution margin format income statement. You won$$t find gross profit on this type of income statement.

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$3.$ Calculate the number of units Jay$-$Zee Company must sell to achieve target operating income $($profit$)$ of $$391,392.$ Round your answer to the nearest whole number.

fill in the blank $5351$a$7$fc$2$fca$066\_1$

units

$4.$ What if the Jay$-$Zee Company wanted to achieve a target operating income of $$378,000?$ Would the number of units needed increase or decrease compared to your answer in Requirement $3?$ Round your answer to the nearest whole number.

Decrease

Compute the number of units needed for the new target operating income.

fill in the blank $5351$a$7$fc$2$fca$066\_3$

units