Calculate operating income if the selling price is raised

Reference no: EM13578309

Miller Metal Company makes a single product that sells for $32 per unit. Variable costs are $/unit abd fixed costs total $47,600/month

Required

a. Calculate the number of units that must be sold each month for the firm to break even

b. Assume current sales are $160,000. Calculate the margin of safety and the margin of safety ratios

c. Calculate operating income if 5,000 units are sold in a month

d. Calculate operating income if the selling price is raised to $33/unit, advertising expenditures are increased by $7,000/month and monthly unit sales volume becomes 5,400 units

e. Assume that the firm adds another product to its product line and that the new product sells for $20/unit, has a variable cost of $14/unit, and causes fixed expenditures in total to increase to $63,000/month. Calculate the firm's operating income if 5,000 units of the orginal product and 4,000 units of the new product are sold each month. For the orginal product, use the selling price and variable costs data given in the problem statement

f. Calculate the firm's operating income if 4,000 units of the orginal product and 5,000 units of the new product are sold each month

g. Explain why operating income is different in parts E and F, even though sales totaled 9,000 units is each case

Reference no: EM13578309

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