The Sock Company buys hiking socks for $6 a pair and sells then for $10. Management...

 

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The Sock Company buys hiking socks for $6 a pair and sells then for $10. Management budgets monthly fixed costs to be $12,000 per month. Required (consider each of the following questions separately): a) What is the monthly breakeven point in units and dollars? b) What is the monthly sales level in units required to earn a target income of $6,000? c) Prepare a CVP graph for The Sock Company. Clearly label all pieces of the graph so management understands it. d) e) What is the break event point in units if management reduces the selling price to $8 a pair? The Sock Company finds a new supplier for the sock who will charge one dollar less than they are paying their current supplier. What is the breakeven point in dollars? f) The Sock Company plans to advertise in hiking magazines. The ad campaign will increase total fixed costs by $2,000 per month. What is the breakeven point in units? g) In addition to selling hiking socks, The Sock Company would like to start selling sports socks. They expect to sell one pair of hiking socks for every three pairs of sports socks. They will buy the sports socks for $4 per pair and sell them for $8 per pair. Total fixed costs will stay at $12,000 per month. Calculate the breakeven point in units for both hiking socks and sports socks. The Sock Company buys hiking socks for $6 a pair and sells then for $10. Management budgets monthly fixed costs to be $12,000 per month. Required (consider each of the following questions separately): a) What is the monthly breakeven point in units and dollars? b) What is the monthly sales level in units required to earn a target income of $6,000? c) Prepare a CVP graph for The Sock Company. Clearly label all pieces of the graph so management understands it. d) e) What is the break event point in units if management reduces the selling price to $8 a pair? The Sock Company finds a new supplier for the sock who will charge one dollar less than they are paying their current supplier. What is the breakeven point in dollars? f) The Sock Company plans to advertise in hiking magazines. The ad campaign will increase total fixed costs by $2,000 per month. What is the breakeven point in units? g) In addition to selling hiking socks, The Sock Company would like to start selling sports socks. They expect to sell one pair of hiking socks for every three pairs of sports socks. They will buy the sports socks for $4 per pair and sell them for $8 per pair. Total fixed costs will stay at $12,000 per month. Calculate the breakeven point in units for both hiking socks and sports socks.

Answer rating: 100% (QA)

a The monthly bre ake ven point in units is 2 000 pairs of socks The monthly bre ake ven point in do... View the full answer