What would the companys monthly net operating income be if

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Reference no: EM13483642

Perkins company produces and sells a single product. The Company's income statement for the most recent month is given below:

Sales (15,000 units at $32 per unit)


$480,000

Less variable costs:

Direct materials (variable)

$67,500


Direct labor (variable)

75,000


Variable factory overhead

50,000


Variable selling and other expenses

40,000

232,500

Contribution margin


247,500

Less fixed expenses:

Fixed factory overhead

75,000


Fixed selling and other expenses

45,000

120,000

Net operating income


$127,500

There are no beginning or ending inventories.

Required:

  1. Compute the company's break-even point in units and sales dollars.
  2. What would the company's monthly net operating income be if sales and total variable costs increased by 25% and total fixed factory overhead dopped by $30,000?
  3. What total level of sales (in Units)must the company achieve in order to earn a target profit of $45,000?
  4. The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 50 percent, but it will double the costs for fixed factory overhead. Every other cost remains unchanged. Compute the new break-even point in units.

Reference no: EM13483642

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