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Rush Company developed the following information for its product:

Sales price=$90 per unit,Variable cost=54 per unit, Contribution margin= $36 per unit, Total fixed costs=$1,080,000.

Instructions:

Answer the following independent problems and show computations using the contribution margin technique to support the answer.

1-How many units must be sold to break even?

2-What is the total sales that must be generated for the company to earn a profit of $60,000?

3-If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making?

4-Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $135,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M954316

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