Ruiz Company Produces and Sells a Product That Has Variable

question 143

Essay

Ruiz Company produces and sells a product that has variable costs of $50 and a selling price of $90.Its current sales total $270,000 per month.Fixed manufacturing costs total $40,000 per month and fixed selling and administrative costs total $35,000 per month.The company is considering a proposal that will increase the selling price by 10%,increase the fixed manufacturing costs by 10%,and increase the fixed selling and administrative costs by $1,500.
Required:
1)Compute the company's current break-even point in units.
2)Compute the company's current income and margin of safety in dollars.
3)Compute the break-even point in units assuming the proposal is accepted.
4)Compute the company's income assuming the proposal is accepted and sales total 3,300 units.Should the proposal be accepted?

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Definitions:

Expression

A combination of numbers, variables, and arithmetic operations.

Simplify

To simplify an expression means to make it as straightforward as possible by combining like terms and performing arithmetic operations.

Expression

An expression is a combination of symbols that represent a value or relationship.

Positive Exponents

Exponents that are greater than zero, indicating the number of times the base is multiplied by itself.