Office Oulet LTD. produces and sells printing products across Canada. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for the entire year. Unfortunately, the printing business in the region where Office Depot is located is extremely competitive. More than 100 printing shops are all competing for the same business. The company currently manufactures one type of high-quality printer with the average unit selling prices, unit variable costs, and direct fixed costs are as follows: 

Budgeted Costs ...........................$ 

Unit Sales Price ......................5,000

Direct Labour / Unit ..............1,386

Direct Materials / Unit .........1,433

Variable Mfg. OH / Unit .......1,195

Depreciation .....................150,000

Insurance Expense ...........50,000

Salaries Expense ...............10,000

Rent Expense ....................15,000 

Required: 

1) Calculate the following: a. Number of printers that are expected to be sold during the current year b. number of printers that must be sold for Office Outlet to break even c sales dollarsin order to break even d. generate a graph which plots the break even analysis 

2) Office Outlet can buy machines that will make the majority of the printer parts. If the company chooses to purchase the machines, the variable costs will decrease by 3% but the fixed costs will increase by $52,000. The plan would be to purchase the machine at the beginning of July. Fixed costs for the company are incurred equally throughout the year. Calculate the following: 

a. impact on operating income 

b. new number of printers to break eve

c. sales dollars to break eve

3. Office Outlet is considering the option of opening a new retail outlet which will increase salaries by $40,000; insurance by $10,000 and rent expense by $30,000 per year. This is expected to increase sales by 25 percent and the plan would be to open this up at the beginning of July (half way through the upcoming year). Calculate the following: 

a. Impact on Office Outlet's expected profits for the year 

b. new break even point in quantity of printers 

c. new break even point in sales dollars 

Answer rating: 100% (QA)

1 a Number of printers that are expected to be sold during the current year Answer No of Printers Ex... View the full answer