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Determine how many more units must be sold

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Reference no: EM133102637

Question - The following budgeted information is available for SMJ Corp. (SMJ) for the upcoming year, based on sales of 80,000 units:

Sales $10,000,000

Variable costs 7,500,000

Contribution margin 2,500,000

Fixed costs 1,500,000

Operating income $1,000,000

Required -

a) Calculate SMJ's break-even point in units.

b) Calculate SMJ's margin of safety in units.

c) Determine how many more units (above the current volume) must be sold if SMJ wishes to increase operating income to $1,500,000.

d) Assume that SMJ has an opportunity to enter a new market that would cost an additional $275,000 in fixed costs but would increase sales by 10%. Determine whether SMJ should enter into this opportunity.

Reference no: EM133102637

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