Polk Company Developed the Following Information for Its Product

question 85

Essay

Polk Company developed the following information for its product:
Instructions
Answer the following independent questions and show computations using the contribution margin technique to support your answers.
1. How many units must be sold to break even?
2. What is the total sales that must be generated for the company to earn a profit of $60,000?
3. If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making?
4. Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $135,000.

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Definitions:

Ghrelin

A hormone produced in the stomach that stimulates appetite, promoting the intake of food by signaling the brain when the body needs energy.

Obestatin

A hormone believed to suppress appetite, produced in the stomach and intestines.

Appetite

The innate craving to fulfill a physical requirement, particularly for nourishment.

Novel Foods

Foods that are new to the diet, typically encompassing products developed using new technologies and ingredients not traditionally consumed.