Parkins Company produces and sells a single product. The company's income statement for the most...
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Accounting
Parkins Company produces and sells a single product. The company's income statement for the most recent month is given below:
Sales (38,000 units at $41 per unit)
$
1,558,000
Less manufacturing costs:
Direct materials
$
304,000
Direct labor (variable)
380,000
Variable factory overhead
76,000
Fixed factory overhead
190,000
950,000
Gross margin
608,000
Less selling and other expenses:
Variable selling and other expenses
152,000
Fixed selling and other expenses
266,000
418,000
Net operating income
$
190,000
There are no beginning or ending inventories.
Required:
a.
Compute the company's monthly break-even point in units of product. (Round your answer to the nearest whole number.)
Break-even point in units
b.
What would the company's monthly net operating income be if sales increased by 27% and there is no change in total fixed expenses?
Net operating income
$
c.
What dollar sales must the company achieve in order to earn a net operating income of $210,000 per month? (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)
Sales
$
d.
The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 37 percent, but it will double the costs for fixed factory overhead. Compute the new break-even point in units. (Do not round intermediate calculations. Round your final answer to the nearest whole number.)
New break-even point in units
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