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How many units is the company expected to sell

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Question - Consider zagol manufacturing which is engaged in the manufacturing of product ABC. To produce one unit of the product the company incurs the following costs:

Direct material is $5/kg, Direct labor is $10/hour and Total Manufacturing overhead is $30000.The company produces a total of 10000 units per month. And the actual price the product is sold is around $24. Company XYZ offers to buy a total of 5000 units this month at the price of $ 17/unit. Would you accept the order if you are the manager? (assume 20% of the manufacturing overhead is variable cost).

Form the question above considering all the manufacturing costs are fixed calculate the Breakeven point both in unit and quantity using the contribution and equation approach. How many units is the company expected to sell to make a before tax target profit $400,000. Will the result be different if we consider 30% tax?

Reference no: EM132628038

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