Reference no: EM132556610
The following data belongs to x-co, which is engaged in the production and selling of chairs. The selling price per unit, variable cost per unit and fixed operating costs are $40, $20 and $500,000 respectively. The company's capital structure consists of a loan of $600,000 having an annual interest of 10%. The company has 10,000 shares of preferred stock and the annual divided is $3 per share for the preferred stockholders and the total number of shares outstanding for the common stock holders is 50,000. Assume income tax rate to be 34%.
Required
Question A. How many units must be produced and sold to maintain the operating break-even point?
Question B. How much is the dollar sales of that point?
Question C. Determine the total operating profit or operating loss when i. 10,000 units are produced and sold. ii. 25,000 units are produced and sold iii. 40,000 units are produced and sold
Question D. The management of x-company plans to earn $400,000 in operating profit during the coming year. Then how many units must be produced and sold to get the aforementioned targeted operating profit? How much is the targeted sales?
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