Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a company produces and sells a single product. the

A company produces and sells a single product. The product's current selling price per unit...

70.2K

Verified Solution

Question

Accounting

A company produces and sells a single product. The product's current selling price per unit is $300 and variable expenses per unit are $60. Fixed expenses are $120,000 each month. The current sales level is 1,300 units per month.

a) What is the company's break even point each month in units?

b) What is the company's current margin of safety in dollars?

c) If the company would like to achieve a profit of $21,600 during the month, how many units must it sell? (ignore taxes)

d) (i) Calculate the company's current operting leverage. Round to 3 decimal places i.e., XX.XXX (ii) If sales increase by 15%, by how much will net operating income increase as a percentage?

e) The company is thinking about using a different part in production that will result in a $50 increase in variable expenses. This will lead to a monthly sales unit decrease of 500 units. (i) What will be the dollar change in net operating income if this occurs? (ii) Should the company do this from a financial perspective?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

The adjusted trial balance for Pharoah Company is givenbelow.Pharoah CompanyTrial BalanceAugust 31,...The adjusted trial...

Accounting
Q

Asparaginase catalzyes the following reaction: Asparagine + H2O → aspartate + NH4+ The enzyme has been isolated...

Chemistry
Q

atsApp Image 2021 04 16 at 10 2554 AM jpeg 252 11 Find the currents...

Physics
Q

A cylinder of radius R 20 cm is moving between two planks as shown in...

Physics
Q

This is a 2 page document Directions Find the total number of outcomes that are...

Basic Math
Q

A company is designing propane tanks that are cylindrical with hemispherical ends Assume that the...

Calculus
Q

Solve for the approximate solutions in the interval 0 27 List your answers separated by...

Calculus
Q

The stockholders equity section of the balance sheet for Mann Equipment...

Accounting
Q

John Taylor owns and manages the Stratford Hotel in Romford Road. Taylor recently bought the...

Accounting
Q

Sami Design Ltd manufactures Sand musical instrumenta for use by hgh schoel studenta. The company...

Accounting
Q

Publicly traded companies are not permitted to be owned by individuals. Select one: True False

Accounting
Q

George has been in academia his entire career and wholeheartedly believes that education is the...

Finance