Reference no: EM132452021

Problem - Bowie industries has old inventory on hand that cost $21750. Its scrap value is $29000. The inventory could be sold for $72500if manufactured at an additional cost of $21750. What would Waterway do?

1) Manufactured further and sell for $72500

2) Sell the inventory for $29000 scrap value

3) Hold the inventory at its $21750 costs

4) Dispose of the inventory to avoid any further decline in value?

	Per unit
Sales price	$90.00
Variable cost	$63
Contribution Margin	$27
Total fixed cost	$1,215,000

Required -

1) How many units must be sold to break even?

2) What is the total sales that must be generated for the company to earn a profit of $60,000

3) If the company is presently selling $50,000 units but plan to spend an additional $108,000 on an advertising program, how many additional units must company sell to earn the same net income it is now making?

4) Using the original data in the problem compute a new break-even point in units if the unit sales price is increased 20% unit variable costs is increased by 10% and the total fixed cost are increased by $236,250 round to whole unit?