(Break-even point and selling price) Simple Metal Works, Inc. will manufacture and sell 180,000 units next year....
Question:
(Break-even point and selling price)
Simple Metal Works, Inc. will manufacture and sell 180,000 units next year. Fixed costs will total $290,000, and variable costs will be 55 percent of sales.
a. The firm wants to achieve a level of earnings before interest and taxes of $240,000. What selling price per unit is necessary to achieve this result?
b. Set up an analytical income statement to verify your solution to part (a).
a. What selling price per unit is necessary to achieve a level of earnings before interest and taxes of $240,000? (Round to three decimal places.) $ANSWER:
b. Set up the following analytical income statement to verify your solution to part (a).
(Round up all items to the nearest dollar.) ANSWERS:
Sales | ||
Less: Variable costs (55% of sales) | ||
Revenues before fixed costs | ||
Less: Fixed costs | ||
EBIT | $240,000 |
Expert Answer:
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