Reference no: EM132058071

Question - Larson Co. produces telephone answering machines. At March 1, Larson estimates fixed costs related to production to be $700,000. The unit selling price, unit variable cost, and unit contribution margin for Larson Co. are as follows:

Unit selling price $75Unit

Variable cost 25Unit

Contribution margin $50

Instructions: Perform the following calculations assuming the facts given above, unless otherwise indicated. (Round to the nearest dollar.)

(1) Calculate the break-even point in units for Larson Co.

(2) Assume Larson Co. is contemplating paying $2,000 more to each of five factory supervisors. What would the new break-even point be if such a plan were put into action?

(3) What would the break-even point be if the cost of direct materials increased by $1.00 per unit?

(4) What would the break-even point be if the selling price increased to $77 per telephone answering machine?

(5) What is the sales volume necessary to earn a target profit of $300,000?