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Question - Werner Company produces and sells disposable foil baking pans to retailers for $2.45 per pan. The variable cost per pan is as follows:
Direct materials $0.32
Direct labor 0.62
Variable factory overhead 0.63
Variable selling expense 0.18
Fixed manufacturing cost totals $135,274 per year. Administrative cost (all fixed) totals $18,446
1. Compute the number of pans that must be sold for Werner to break even.
2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost?
3. How many pans must be sold for Werner to earn operating income of $7,000?
4. How much sales revenue must Werner have to earn operating income of $7,000?
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