Vernon Manufacturing Company reported the following data regarding a product it manufactures and sells. The...
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Accounting
Vernon Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $45.
Variable costs
Manufacturing
$
12
per unit
Selling
5
per unit
Fixed costs
Manufacturing
$
168,000
per year
Selling and administrative
$
184,800
per year
Required
Use the per-unit contribution margin approach to determine the break-even point in units and dollars.
Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $207,200.
Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 20,200 units, how much could it pay in salaries for salespeople and still have a profit of $207,200? (Hint: Use the equation method.)
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