Using the contribution margin approach compute the number

Assignment Help Accounting Basics

Reference no: EM13597307

Icon Industries is considering a new product for its Trophy Division. The product, which would feature an alligator, is expected to have global market appeal and to become the mascot for many high school and university athletic teams. Expected variable unit costs are as follows: direct materials, $18.50; direct labor, $4.25; production supplies, $1.10; selling costs, $2.80; and other, $1.95. Annual fixed costs are depreciation, building, and equipment, $36,000; advertising, $45,000; and other, $11,400. Icon Industries plans to sell the product for $55.00.

Required:
Round the per unit amounts to two decimal places in your computations.
1. Using the contribution margin approach, compute the number of units the company must sell to (a) break even and (b) earn a profit of $70,224.

a. BE units _______ units
b. Target sales unit ________ units

2. Using the same data, compute the number of units that must be sold to earn a profit of $139,520 if advertising costs rise by $40,000.
________ units

3. Using the original information and sales of 10,000 units, compute the selling price the company must use to make a profit of $131,600. (Hint: Calculate contribution margin per unit first.)
$____________

4. According to the vice president of marketing, Albert Flora, the most optimistic annual sales estimate for the product would be 15,000 units, and the highest competitive selling price the company can charge is $52 per unit. How much more can be spent on fixed advertising costs if the selling price is $52, if the variable costs cannot be reduced, and if the targeted profit for 15,000 unit sales is $251,000?
$____________________

Reference no: EM13597307

Questions Cloud

Sonne company produces a perfume called whim the direct : sonne company produces a perfume called whim. the direct materials and direct labor standards for one bottle of whim

Identify a product or service from wal-mart that could use : identify a product or service from wal-mart that could use abc. you can also use this technique for selling and

Discuss how this course has affected you in your : 1. reflect and describe which key concepts and topics in this course have made you a stronger candidate to enter the

What is the opportuity cost of allowing the the : the university athletic department has been asked to host a professional basketball game. the only other event

Using the contribution margin approach compute the number : icon industries is considering a new product for its trophy division. the product which would feature an alligator is

When property is disposed of what factors influence the : when property is disposed of what factors influence the amount of the deductible loss?compare and contrast the

An employee earns 5500 per month working for an employer : an employee earns 5500 per month working for an employer. the fica tax rate for social security is 6.2 and the fica

Ida sidha karya company is a family-owned company located : ida sidha karya company is a family-owned company located in the village of gianyar on the island of bali in indonesia.

Waltons warehouse reported sales of 640000 a contribution : waltons warehouse reported sales of 640000 a contribution margin of 8 per unit fixed costs of 314000 and a profit of

User Account

All Pages