Modern Footwear Industries manufactures a complete line of men's and women's dress shoes for independent merchants....
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Modern Footwear Industries manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price for its finished product is RM85 per pair. The variable cost is RM58. Modern Footwear incurs fixed costs of RM170,000 annually and interest paid is RM20,000. The current sales level of the company is 12,500 pairs of shoes. Required: a. What is the break-even point in units and value (RM) for the company? b. What is the break-even point in unit and value if the company's sales volume increase by 20%? Original sales volume = 12,500 units New sales volume = 15,000 units c. Calculate the margin of safety (in units and value) of the company? d. If the company plans to increase its current profit by 25%, what is the sales in units and value that they need to incur? Modern Footwear Industries manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price for its finished product is RM85 per pair. The variable cost is RM58. Modern Footwear incurs fixed costs of RM170,000 annually and interest paid is RM20,000. The current sales level of the company is 12,500 pairs of shoes. Required: a. What is the break-even point in units and value (RM) for the company? b. What is the break-even point in unit and value if the company's sales volume increase by 20%? Original sales volume = 12,500 units New sales volume = 15,000 units c. Calculate the margin of safety (in units and value) of the company? d. If the company plans to increase its current profit by 25%, what is the sales in units and value that they need to incur?
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Answer rating: 100% (QA)
Break even point is that poin of sale on which No profit or loss Fixed cost 17000020000 RM190000 Con... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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