BEP ANALYSIS

QUESTION :

Lawn Master Company, a manufacturer of riding lawn mowers, has a projected income for 2010 as follows:

Sales $46,000,000

Operating expenses

Variable expenses $32,200,000
Fixed expenses 7,500,000

Total expenses 39,700,000

Operating Profit $ 6,300,000


Required

1. Determine the breakeven point in sales dollars.


2. Determine the required sales in dollars to earn a before-tax profit of $8,000,000.


3. What is the breakeven point in sales dollars if the variable cost increases by 12 percent?