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Poole Corporation has collected the following information after its first year of sales. Net sales were $1,814,400 on 113,400 units; selling expenses $272,160 (40% variable and 60% fixed); direct materials $579,474; direct labor $323,190; administrative expenses $317,520 (20% variable and 80% fixed); manufacturing overhead $408,240 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.

Compute (1) the contribution margin for the current and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.

Contribution margin for current year
Contribution margin for projected year
Fixed costs for current year

Compute the break-even point in units and sales dollars for the first year.

Break-even point in units
Break-even point in dollars $

The company has a target net income of $351,540. What are the required sales in dollars for the company to meet its target.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9796957

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