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Calculate the break-even in units and sales dollars

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Reference no: EM133010497

Question - Tartan Company is a single-product entity, and provides the summary data shown opposite relating to its product for 2020.

Selling price per unit $50

Variable manufacturing costs $24

Annual fixed manufacturing costs $250,000

Variable marketing, distribution and admin costs $8

Annual fixed non-manufacturing costs $128,000

Annual volume 24,000 units

TASK - Please answer all components below.

a. Calculate the contribution margin per unit.

b. Calculate the contribution margin ratio.

c. Calculate the break-even in units and sales dollars for 2020.

d. Calculate the profit earned in 2020.

e. Tartan Company is considering changes in plant operations and the production process for 2021. The changes would result in a reduction of variable costs per unit by $6; and increase fixed manufacturing costs by $132,500. How many units would need to be sold to earn the same profit as in 2020? Would you recommend the changes?

Reference no: EM133010497

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