(Useful Things), based in St. Petersburg, Russia, makes robot floor cleaning machines, and sells them...
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Accounting
(Useful Things), based in St. Petersburg, Russia, makes robot floor cleaning machines, and sells them to department and specialty stores for $1,000 each. (I have translated the figures from Russian rubles for you...) Variable costs to manufacture the product are $443 per unit, while fixed costs will total $2,800,000 this year.
Find the contribution margin per unit, and the contribution rate (CR) for this product.
Calculate this year's breakeven point in both units and dollars.
If Useful Things wants to make an after-tax income of $120,000, how many units must the company sell, and what should be the value of their sales in dollars?
The business income tax rate in Russia is currently 20% (true!).
If they achieve the level of sales described in part c above, calculate their margin of safety.
The company is considering making the product out of stronger material than before, causing an increase in variable costs by $23/unit. If nothing else in their situation changes, find the new breakeven point in units.
Do you think the company should change to the stronger material? Support your answer with intelligent reasons. (Note: your decision can go either way, but please support it!)
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