Solution-Determine air peanuts breakeven point in units

Determine air peanuts breakeven point in units

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Reference no: EM13536162

Breakeven point, what-if analysis Air Peanut Company manufactures and sells roasted peanut packets to commercial airlines. Following are the price and cost data per 100 packets of peanuts:

Estimated annual sales volume 11,535,700 packets
Selling price	$35.00
Variable costs:
Raw materials	$16.00
Direct labor	7
Manufacturing support	4
Selling expenses	1.6
Total variable costs per 100 packets	$28.60
Annual fixed costs:
Manufacturing support	$192,000
Selling and administrative	276,000
Total fixed costs	$468,000

Required

(a) Determine Air Peanut's breakeven point in units.

(b) How many packets does Air Peanut have to sell to earn $156,000?

(c) Air Peanut expects its direct labor costs to increase by 5% next year. How many units will it have to sell next year to break even if the selling price remains unchanged?

(d) If Air Peanut's direct labor costs increase by 5%, what selling price per 100 packets must it charge to maintain the same contribution margin-to-sales ratio?

Reference no: EM13536162

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Determine air peanuts breakeven point in units

Reference no: EM13536162

Reference no: EM13536162

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