Question -
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Prachi Company produces and sells disposable foil baking pans to retailers for $2.45 per pan. The variable cost per pan is as follows:
Direct materials $0.28
Direct labor 0.56
Variable factory overhead 0.65
Variable selling expense 0.17
Fixed manufacturing cost totals $136,746 per year. Administrative cost (all fixed) totals $18,647.
Required:
1. Compute the number of pans that must be sold for Prachi to break even.
2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost?
Which is used in cost-volume-profit analysis?
3. How many units must be sold for Prachi to earn operating income of $9,006?
4. How much sales revenue must Prachi have to earn operating income of $9,006?