(CVP) Seattle Leisure Designs has designed a new athletic suit. The company plans to produce and sell 30,000 units of the new product in the coming year. Annual fixed costs are $600,000, and variable costs are 70 percent of selling price. If the company wants a pre-tax profit of $300,000, at what minimum price must it sell its product?
(CVP) Sheridan Shacks makes portable garden sheds that sell for $1,800 each. Costs are as follows:
Per Unit
Total
Direct material
$800
Direct labor
90
Variable production overhead
60
Variable selling and administrative cost
50
Fixed production overhead
$200,000
Fixed selling and administrative
60,000
a. How many garden sheds must the company sell to break even?
b. If Sheridan Shacks’ management wants to earn a pre-tax profit of $200,000, how many garden sheds must it sell?
c. If Sheridan Shacks’ management wants to earn a pre-tax profit of $280,000, how many garden sheds must it sell?
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