The Morrison Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at...
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Accounting
The Morrison Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at $ 0.50 per unit. Fixed costs are $ 1 comma 140,000 per year. Variable costs are $ 0.20 per unit.
Consider each case separately:
1.
a. What is the current annual operating income?
b. What is the current breakeven point in revenues?
Compute the new operating income or loss for each of the following changes:
2. A $0.80 per unit increase in variable cost.
3. A 20% increase in fixed costs and a 20% increase in units sold.
4. A 40% decrease in fixed costs, a 40% decrease in selling price, a 10% decrease in variable cost per unit. and a 45% increase in units sold.
Compute the new breakeven point in units for each of the following changes:
5. A 20% increase in fixed costs.
6. A 20% increase in selling price and a $10,000 increase in fixed costs.
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