The Following Information Was Obtained from the Accounting Records of Maxamillion

question 57

Essay

The following information was obtained from the accounting records of Maxamillion Manufacturing Company during a period when the company sold 200,000 units.
A. Compute the company's per-unit contribution margin and break-even point.
B. How many units must Maxamillion sell to produce a target net profit of $550,400?
C. Assume that Maxamillion was able to reduce the variable cost per unit by $5. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $800,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 20%, what effect, if any, would this cost increase have on the company's contribution margin?

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Definitions:

Public Utilities

Companies that provide essential services to the public such as water, electricity, and telecommunications, often subject to government regulation due to their nature of operation.

LRAC Curve

Long-Run Average Cost curve, showing the minimum average cost of production at different levels of output when all inputs are variable.

Total Cost

The complete cost of production, including both fixed and variable costs.

Barrier To Entry

Factors that prevent or hinder companies from entering a specific market or industry.