Reference no: EM132743283

Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $120 per unit and has a CM ratio of 25%. The company's fixed expenses are $405,000 per year. The company plans to sell 14,000 knapsacks this year.

Required:

Problem 1. What are the variable expenses per unit?

Problem 2. Use the equation method for the following:

a. What is the break-even point in units and in sales dollars?

b. What sales level in units and in sales dollars is required to earn an annual profit of $117,000?

c. What sales level in units is required to earn an annual after-tax profit of $117,000 if the tax rate is 25%?

d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $6 per unit. What is the company's new break-even point in units and in sales dollars? (Do not round intermediate calculations. Round your final answers to the nearest whole number.)

Problem 3. Use the formula method for the following:

a. What is the break-even point in units and in sales dollars?

b. What sales level in units and in sales dollars is required to earn an annual profit of $117,000?

c. What sales level in units is required to earn an annual after-tax profit of $117,000 if the tax rate is 25%?

d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $6 per unit. What is the company's new break-even point in units and in sales dollars? (Do not round intermediate calculations. Round your final answers to the nearest whole number.)