You are currently trying to decide between two cost structures for your business: one that...
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Accounting
You are currently trying to decide between two cost structures for your business: one that has a greater proportion of short-term fixed costs and another that is more heavily weighted to variable costs. Estimated revenue and cost data for each alternative are as follows: Selling price per unit Variable cost per unit Short-term fixed costs per year Cost Structure Alternative 1 Alternative 2 $ 100 $ 100 85 80 55,000 60,000 Required: 1. What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same? 2. Suppose your profit goal for the coming year is 5% of sales (.e., operating profit/sales = 5%). What sales level in units is needed under each alternative to achieve this goal? 3. Suppose again that your profit goal for the coming year is 5% of sales. What sales volume in dollars is needed under each alternative to achieve this goal? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same
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