Parkins Company produces and sells a single product. The company's income statement for the most recent month is given below:
11aug1975 (Not rated)
(Not rated)
| Parkins Company produces and sells a single product. The company's income statement for the most recent month is given below: | ||
| Sales (8,000 units at $41 per unit) | $328,000 | |
| Less manufacturing costs: | ||
| Direct materials | $64,000 | |
| Direct labor (variable) | $80,000 | |
| Variable factory overhead | $16,000 | |
| Fixed factory overhead | $40,000 | $200,000 |
| Gross margin | $128,000 | |
| Less selling and other expenses: | ||
| Variable selling and other expenses | $32,000 | |
| Fixed selling and other expenses | $56,000 | $88,000 |
| Net operating income | $40,000 | |
| There are no beginning or ending inventories. | ||
| Required: | ||
| a.Compute the company's monthly break-even point in units of product. (Round your answer to the nearest whole number.) | ||
| b.What would the company's monthly net operating income be if sales increased by 24% and there is no change in total fixed expenses? | ||
| c. What dollar sales must the company achieve in order to earn a net operating income of $60,000 per month? (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.) | ||
| d.The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 43 percent, but it will double the costs for fixed factory overhead. Compute the new break-even point in units. (Do not round intermediate calculations. Round your final answer to the nearest whole number.) |
11 years ago
Parkins Company produces and sells a single product
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