A Firm Has the Following Sales Data for One Month

question 19

Essay

A firm has the following sales data for one month.

a. Find the number of cases the firm must sell per month to break even.
b. The firm has an unexpected situation in which it can sell 4,000 cases of its product for the next three months 12,000 cases total) for $55 per case. The firm can only supply 7,000 cases from inventory and can only increase production to 11,000 cases total per month. There will be no variable Selling & Administrative Expenses connected with the sale. Should the firm supply the 4,000 cases per month? Why or why not?

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Definitions:

Gross Margin

The difference between sales and the cost of goods sold, which measures the profitability of the products sold before other expenses are deducted.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.

Income From Operations

Earnings generated from a company's regular business activities, excluding revenues and expenses from non-operating activities.

Sales

The total revenue generated from goods or services sold by a company during a specific period, indicating the primary source of business income.