Reference no: EM132622917

Question -

Q1. Two products have the following selling prices and variable costs:

	Q	Y
Unit Selling Price	$100.00	$130.00
Unit Variable Cost	85.00	95.00
UCM	$15.00	$35.00
UCM Ratio	15/100	35/130
	15.00%	26.92%

Five Units of Q are sold for every 4 units of Y. Total annual fixed costs are $80,600.

Required - How many units of product must be sold to earn 100,000 of operating income?

Q2. Air Company sells its product for $100 per unit. Estimated costs for October 20Y9 are as follows:

Cost Variable product costs per unit $50 Variable sales commission per unit 20% of selling price Total fixed production overheads $20,000 Total fixed administrative salaries $10,000

Required -

a) Calculate the Unit Contribution Margin (Hint - you will need to identify the company's variable costs).

b) Calculate the company's Break-even units and Break-even Dollars.

c) How many units must be sold during October to earn a profit of $10,000?

d) Assume that sales commission is now $10 for every unit sold. Calculate revised break-even point units.