A company has variable costs of $22.50, total fixed costs of $21,700,000 and plans to sell its product for $38.00. … A company has variable costs of $22.50, total fixed costs of $21,700,000 and plans to sell its product for $38.00. In 2015 it sold 2,200,000 units of product. Required: a) breakeven in units and dollars; b) assume management wants to earn $15,000,000 in operating income, how many units must be sold; c) assume income tax rates are 35% of pre-tax income and management wants to earn $13,000,000 after tax- how many units are required; d) for 2015 what is the margin of safety in dollars and percentage; e) what is the operating leverage in 2015; the production manager wants to automate production and lower variable costs by $2 per unit and spend an additional $4,000,000 fixed costs per year- is this a good idea? The sales manager wants to drop prices by $2 per unit and spend an added $300,000 on advertising, while volume increase by 150,000 units- is this a good idea?<\/p>\n","protected":false},"excerpt":{"rendered":"
A company has variable costs of $22.50, total fixed costs of $21,700,000 and plans to sell its product for $38.00. … A company has variable costs of $22.50, total fixed costs of $21,700,000 and plans to sell its product for Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-49523","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=49523"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49523\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=49523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=49523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=49523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}