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Rush Company developed the following information for itsproduct:

                                                             Per Unit

Salesprice                                                    ?

Variablecost                                               $63

Contributionmargin                                     30%        

Total fixedcosts                                   $1,350,000

Instructions

Answer the following independentquestions and show computations using the contribution margintechnique to support your answers.

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

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

3. If the company is presently selling 75,000 units,but plans to spend an additional $135,000 on an advertisingprogram, how many additional units must the company sell to earnthe same net income it is now making?

4. Using the original data in the problem, compute anew break-even point in units if the unit sales price is increased20%, unit variable cost is increased by 10%, and total fixed costsare increased by $198,000.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9797791

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