Superior door company sells pre-hung doors to home builders, Ask an Expert

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Superior Door Company sells pre-hung doors to home builders. The doors are sold for $60 each. Variable costs are $42 per door and fixed costs total $450,000 per year. The company is currently selling 30,000 doors per year.

1. What are the variable expenses per unit?

2. Using the equation method:

A. What is the break-even point in units and in sales dollars?

B. What sales level in units and in sales dollars is required to earn an annual profit of $90,000?

C. Assume that through negotiations with the manufacturer the Super Sales Company is able to reduce it's variable expenses by $3 per unit. What is the company's new break-even point in units and in sales dollars?

3. Repeat question 2 using the formula method.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9796642

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