Calculate the number of premium and regular baking machines

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Question - Ballan Company produces and sells two types of baking machines (Premium and Regular). Detailed per unit data of the two products is presented as follows:

Description

Premium

Regular

Sales price

$4,000

$3,700

Variable manufacturing costs

$2,000

$2,000

Variable selling costs

$1,200

$1,200

The 2019 budgeted annual sales volumes for Premium and Regular are 800 and 1,200 units respectively. The budgeted annual fixed costs are also as follows: Fixed Manufacturing cost $600,000 and Fixed Selling & Admin costs $392,000.

Required -

1. Calculate the number of Premium and Regular baking machines the company should sell in order to break-even in 2019. (Ignore income taxes.)

2. Compute the safety margin in units for the year 2019.

3. How many units of Premium and Regular baking machines should the company sell in order to earn before tax profit of $124,000 in 2019?

Reference no: EM133076953

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