Cartel, Inc. is a retailer for digital video disks. The net income for 2020 is...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Cartel, Inc. is a retailer for digital video disks. The net income for 2020 is $400,000 based on a sales volume of 200,000 video disks. Cartel has been selling the disks for $32 each. The variable costs consist of the $20 unit purchase price of the disks and a handling cost of $4 per disk. Cartel's annual fixed costs are $1,200,000. Management is planning for 2021, when it expects that the unit purchase price of the video disks will increase 20%. (Ignore income taxes.) Required: a) Calculate Cartel's break-even point for 2020 in number of video disks. (4 marks) b) What will be the company's net income for 2020 if there is a 10% increase in projected unit sales volume? (4 marks) c) What volume of sales (in dollars) must Cartel achieve in 2021 to maintain the same net income as 2020 (i.e. net income of $400,000) if the unit selling price remains at $32? (5 marks) d) In order to cover a 20% increase in the disk's purchase price for 2021 and still maintain the current contribution-margin ratio, what selling price per disk must Cartel establish for 2021? (74494
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!
