contestada

Warner Clothing is considering the Introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics:

Sales price $18 per unit
Variable costs 2 per unit
Fixed costs 52,000 per month

Required:

a. What number must Warner sell per month to break even?

b. What number must Warner sell per month to make an operating profit of $40,000?

Respuesta :

Answer:

(a) 3,250 units

(b) 5,750 units

Explanation:

(a) BEP(units):

= fixed cost ÷ contribution margin per unit

= $52,000  ÷ ($18 - $2)

= 3,250 units

Therefore, the 3,250 units must Warner sell per month to break even.

(b) BEP(units):  

= (fixed cost + target profit) ÷ contribution margin per unit

= ($52,000 + $40,000) ÷ $16

= 5,750 units

Therefore, the units must Warner sell per month to make an operating profit of $40,000 is 5,750 units.

Otras preguntas