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: Cost Structure Alternative Alternative 2 Selling price per unit 50 $50 Variable cost per unit 20 15 Short-term fixed costs per year 85,000 90,000 Required: What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same? Suppose your profit goal for the coming year is 10% of sales (i.e., operating profit/sales =10% ). What sales level in units is needed under each alternative to achieve this goal? Suppose
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