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Question: Yoda owns and operates "The Force Company" a light sabre producing company. He is considering the introduction of a new custom light sabre that he estimates will generate demand for 8,000 light sabres. The sabres will sell for $100.00 each, with a unit variable cost of $40.00, and annual fixed costs of $600,000. Use Excel formulas for your solutions.

Required: 1. Determine the number of sabres to be sold to break-even.

2. Determine the number of sabres to be sold to earn an operating profit of $22,000.

3. What is the safety margin in units when the company makes an operating profit of $22,000?

4. If 8,600 sabres are sold, determine the operating income. If sales price was increased by 15 percent, variable cost per unit increased by 10 percent, and fixed cost increased by $6,000, determine the new break-even point.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M93076412

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