Question: Schultz Co. currently uses a machine process to produce its only product, the widget. Relevant financial and production information follows: Selling price 14 per unit

Schultz Co. currently uses a machine process to produce its only product, the widget. Relevant financial and production information follows: Selling price 14 per unit Direct materials 3 per unit Direct labor 2.25 per unit Var MOH 1.75 per unit Fixed MOH 65000 per month Var S & A 2 per unit Fixed S & A 25000 monthly Current volume 25000 units monthly a. Calculate how many units Schultz Co. needs to sell to break even. (4 pts) b. Calculate how much in Sales $ Schultz Co. needs to earn $40,000 profit. (4 pts) c. What is Schultz Co. current margin of safety in Sales $? (4 pts) d. Schultz Co. has an opportunity to buy a better processing machine. The purchase would increase the monthly fixed MOH by $15,000, but will reduce the direct labor to $1.50 per unit. Calculate the benefit or loss to Schultz Co. if it decides to buy this machine. (4 pts) e. An advertiser has approached Schultz Co. with an idea. If Schultz Co. puts an ad on-line for a monthly cost of $8,000, sales are estimated to increase by 5%. Calculate the benefit or loss to Schultz Co. if it decides to get the advertisement. (4 pts) Answer part e. independently of the information in part d.

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