mc lennon company has a plant capacity of 100 000 units per year 544663
Breakeven Analysis and Pricing
Mc Lennon Company has a plant capacity of 100,000 units per year, but its budget for this year indicates that only 60,000 units will be produced and sold. The entire budget for this year is as follows:
Don't use plagiarized sources. Get Your Custom Essay on
mc lennon company has a plant capacity of 100 000 units per year 544663
For $10/Page 0nly
|
Sales (60,000 units at $4) |
$240,000 |
|
|
Less cost of goods produced (based on |
||
|
production of 60,000 units) |
||
|
Direct materials (variable) |
60,000 |
|
|
Direct labor (variable) |
30,000 |
|
|
Variable over head costs |
45,000 |
|
|
Fixed overhead costs |
75,000 |
|
|
Total cost of goods produced |
$210,000 |
|
|
Gross margin |
$30,000 |
|
|
Less selling and administrative expenses |
||
|
Selling (fixed) |
$24,000 |
|
|
Administrative (fixed) |
$36,000 |
|
|
Total selling and administrative expenses |
60,000 |
|
|
Operating income (loss) |
($30,000) |
1. Given the budgeted selling price and cost data, how many units would McLennon have to sell to break even? (Hint: Be sure to consider selling and administrative expenses.)
2. Market research indicates that if Mc Lennon were to drop its selling price to $3.80 per unit, it could sell 100,000 units. Would you recommend the drop in price? What would the new operating income or loss be?
Calculator
Our features
We've got everything to become your favourite writing service
Money back guarantee
Your money is safe. Even if we fail to satisfy your expectations, you can always request a refund and get your money back.
Confidentiality
We don’t share your private information with anyone. What happens on our website stays on our website.
Our service is legit
We provide you with a sample paper on the topic you need, and this kind of academic assistance is perfectly legitimate.
Get a plagiarism-free paper
We check every paper with our plagiarism-detection software, so you get a unique paper written for your particular purposes.
We can help with urgent tasks
Need a paper tomorrow? We can write it even while you’re sleeping. Place an order now and get your paper in 8 hours.
Pay a fair price
Our prices depend on urgency. If you want a cheap essay, place your order in advance. Our prices start from $11 per page.