A New Product,an Easy to Store Guitar Stand,is Being Planned,with

question 31

Essay

A new product,an easy to store guitar stand,is being planned,with the following cost estimates: variable cost per unit,$9,and total fixed costs,$58,000.The projected sales price is $13 each.
a.Using the contribution margin approach,compute the number of units that must be sold to break even.
b.Using the same approach and assuming that fixed costs can be reduced by $8,000,how many units must be sold to produce a profit of $65,000?
c.Given the original information and the projection that 50,000 units can be sold,compute the selling price that the producer must use to obtain a profit of $150,000.

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Definitions:

Trade-In Allowance

The amount credited to a buyer for the value of a traded item towards the purchase of a new item.

Accumulated Depreciation

The aggregate depreciation cost allocated to a fixed asset since its initial purchase.

Commercial Substance

A financial concept indicating that a transaction significantly changes the economic position or cash flows of the entity.

Equipment Ledger

A detailed record that tracks the acquisition, depreciation, and disposal of equipment owned by a business.