Perkins company produces and sells a single product the, Ask an Expert

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Perkins company produces and sells a single product. The Company's income statement for the most recent month is given below:

Sales (15,000 units at $32 per unit)		$480,000
Less variable costs:
Direct materials (variable)	$67,500
Direct labor (variable)	75,000
Variable factory overhead	50,000
Variable selling and other expenses	40,000	232,500
Contribution margin		247,500
Less fixed expenses:
Fixed factory overhead	75,000
Fixed selling and other expenses	45,000	120,000
Net operating income		$127,500

There are no beginning or ending inventories.

Required:

Compute the company's break-even point in units and sales dollars.
What would the company's monthly net operating income be if sales and total variable costs increased by 25% and total fixed factory overhead dopped by $30,000?
What total level of sales (in Units)must the company achieve in order to earn a target profit of $45,000?
The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 50 percent, but it will double the costs for fixed factory overhead. Every other cost remains unchanged. Compute the new break-even point in units.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9798669

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