Quantity (EOQ)

Complete the following problems:

• E4-5
• P4-8
• P4-10
• P5-4
• P5-9

E4

• Meeker Company is developing a new product. The selling price has not yet been determined, nor are the variable costs per unit known. The fixed costs are $600,000. Management plans to set the selling price so that variable cost is 55 percent of the selling price.
  • A.        What is the contribution margin ratio?
  • B.        What is the breakeven point in dollars?
  • C.        If management desires a profit of $50,000, what will total sales be?

E5

• Crow, Inc., a not-for-profit company, has a product contribution margin of $40. The fixed costs are $800,000. Crow, Inc., has set a target profit of $35,000 per year.

•  
  • A.        What is the breakeven point in units?
  • B.        How many units must be sold to achieve the target profit?
  • C.        If fixed costs decrease 10 percent, how many units must be sold to achieve the target profit?