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:

Right to Cure

The legal right or opportunity given to a party to rectify or correct a breach of contract or agreement before facing potential penalties or legal action.

Dog Collars

Devices worn around a dog's neck, often used for restraint, identification, fashion, or protection.

Reject Shipment

The act of refusing to accept delivery of goods because they are faulty, damaged, or not as specified in a purchase contract.

Consequential Damages

Financial losses that result indirectly from a breach of contract, beyond the immediate scope of the agreement.