4. Hunter & Sons sells a single model of meat smoker for use in the...
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Accounting
4. Hunter & Sons sells a single model of meat smoker for use in the home. The smokers have the following price and cost characteristics:
Sales price
$
75
per smoker
Variable costs
39
per smoker
Fixed costs
288,000
per month
Hunter & Sons is subject to an income tax rate of 40 percent.
Required:
a. How many smokers must Hunter & Sons sell every month to break even?
b. How many smokers must Hunter & Sons sell to earn a monthly operating profit of $45,360 after taxes?
5.
Rio Coffee Shoppe sells two coffee drinks, a regular coffee and a latte. The two drinks have the following prices and cost characteristics:
Regular Coffee
Latte
Sales price (per cup)
$
1.60
$
2.50
Variable costs (per cup)
0.70
1.10
The monthly fixed costs at Rio are $7,300. Based on experience, the manager at Rio knows that the store sells 80 percent regular coffee and 20 percent lattes.
Required:
How many cups of regular coffee and lattes must Rio sell every month to break even?
Sales price (per cup)
$
1.60
$
2.50
Variable costs (per cup)
0.70
1.10
Answer & Explanation
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