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How many units will the company have to sell

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Reference no: EM13343600

The 2011 income statement for Panorama Ltd is as follows:
PANORAMA LTD
Income Statement for the year ended 31 December, 2011
Sales (50,000 units) $ 1,250,000
Variable Costs $ 750,000
Contribution Margin $ 500,000
Fixed Costs $ 580,000
Net Profit (Loss) $ (80,000)
Required:

Answer the following independent questions and show computations using the contribution margin technique to support your answers:

a) What was the company's break-even point in sales dollars in 2011?
b) How many additional units would the company have had to sell in 2011 in order to earn a net profit of $50,000.
c) If the company is able to reduce variable costs by $2.50 per unit in 2012 and other costs and unit revenues remain unchanged, how many units will the company have to sell in order to earn a net profit of $60,000?

 

Reference no: EM13343600

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