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Total $'s
Sales
Variable Costs
Contribution Margin
Fixed Costs
Income Before Taxes
Tax Expense
Income After Taxes
$1,800,000
$1,350,000
450,000
$240,000
210,000
63,000
147,000
30,000 units
circumstance, and assuming that the company does not believe that
it can increase its selling price, determine the company's breakeven
point and new safety margin.
8. Management has decided to raise the price of its product to $65 per
unit. It also will spend an additional $102,000 per year foradvertising.
Although it has never paid commissions before, the company has
decided to begin paying sales personnel $1 per unit for every unit
sold. Determine the new breakeven point. Also determine the
safety margin of the company under this plan if sales only reach
27,000 units. Note: in calculating your solution, ignore question #7
and solve this question starting with the original data above.
Total $'s
$1,800,000
1,350,000
450,000
$240,000
210,000
63,000
147,000
Per Unit
Figures**
$60.00
45.00
15.00
8.00
7.00
2.10
4.90