The information that follows was obtained from the accounting records of Gladstone Manufacturing during a period when the company sold 100,000 units. $\begin{array}{lr}
\text { Sales } & \$ 8,800,000 \
\text { Variable costs } & 2,400,000 \
\text { Fixed costs } & 6,016,000
\end{array}$
Required:
A. Compute the company's per-unit contribution margin and break-even point in units.
B. How many units must Gladstone sell to produce a target profit of $550,400?
C. Assume that Gladstone was able to reduce the variable cost per unit by $4. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $640,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 10%, what effect, if any, would this cost increase have on the company's contribution margin?

Question

The information that follows was obtained from the accounting records of Gladstone Manufacturing during a period when the company sold 100,000 units. $\begin{array}{lr}
\text { Sales } & \$ 8,800,000 \
\text { Variable costs } & 2,400,000 \
\text { Fixed costs } & 6,016,000
\end{array}$ 
Required: 
A. Compute the company's per-unit contribution margin and break-even point in units.
B. How many units must Gladstone sell to produce a target profit of $550,400?
C. Assume that Gladstone was able to reduce the variable cost per unit by $4. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $640,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 10%, what effect, if any, would this cost increase have on the company's contribution margin?

Quizplus · Accepted Answer

The Answer of The information that follows was obtained from the accounting records of Gladstone Manufacturing during a period when the company sold 100,000 units. $\begin{array}{lr}
\text { Sales } & \$ 8,800,000 \
\text { Variable costs } & 2,400,000 \
\text { Fixed costs } & 6,016,000
\end{array}$ 
Required: 
A. Compute the company's per-unit contribution margin and break-even point in units.
B. How many units must Gladstone sell to produce a target profit of $550,400?
C. Assume that Gladstone was able to reduce the variable cost per unit by $4. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $640,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 10%, what effect, if any, would this cost increase have on the company's contribution margin?