Solution-What the production and unit sales volume level is

What the production and unit sales volume level is

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Reference no: EM132564560

Valley of Fire Corporation has one department that produces three replacement parts for the company. However, only one part can be produced in any month because of the adjustments that must be made to the equipment. The department can produce up to 15,000 units of any one of the three parts in each month. The company expresses the monthly after tax cost/volume/profit relationships for each part using an equation method.

The format of the equations and the equation for each replacement part are given below:

(ATR) X ((SP VC) x (U) FC)

ATR = after-tax rate VC = variable cost FC = fixed costs

SP = selling price U = units

Part

Part Equations

AL45 .6 ((P4.00 P1.25) (U) P33,400)

BT65 .6 ((P4.05 P2.55) (U) P15,000)

GM17 .6 ((P4.10 - P2.00) (U) - P22,365)

Question 1: The production and unit sales volume level at which Valley will be indifferent as to whether Part BT62 or GM17 is produced is

Reference no: EM132564560

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What the production and unit sales volume level is

Reference no: EM132564560

Reference no: EM132564560

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