Tenny, Inc. will manufacture and sell 50,000 units next year. Fixed costs will total $290,000, and variable
Question:
Tenny, Inc. will manufacture and sell 50,000 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 |
Foundations Of Finance
ISBN: 9780135160619
10th Edition
Authors: Arthur J. Keown, John H. Martin, J. William Petty