Reference no: EM13754524
The Bruggs and Strutton Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units.
Less: cost of goods sold $1,120,000
Gross margin $480,000
Less: Operating expense $100,000
Net Income $380,000
Cost of goods sold consists of $810,000 of variable costs and $310,000 of fixed costs. Operating expenses consist of $30,000 of variable costs and $70,000 of fixed costs.
Required:
A. Calculate the break-even point in units and sales dollars.
B. Calculate the safety margin.
C. Assuming a 35% tax rate only for Part C, how many units must Bruggs & Strutton must sale in order to an after tax profit of $450,000.
D. Bruggs and Strutton received an order for 6,000 units at a price of $25.00. There will be no increase in fixed costs, but variable costs will be reduced by $0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order.
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