Reference no: EM132828807

Problem - Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows:

Number of canoes produced and sold	500	700	850
Total costs
Variable costs	$85,000	$119,000	$144,500
Fixed costs	$238,000	$238,000	$238,000
Total costs	$323,000	$357,000	$382,500
Cost per unit
Variable cost per unit	$170.00	$170.00	$170.00
Fixed cost per unit	476.00	340.00	280.00
Total cost per unit	$646.00	$510.00	$450.00

Required -

1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars.

2. If Sandy Bank sells 1,530 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $500.)

3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $120,000 profit.