Question:
CVP Analysis-Missing Data
Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 150,000 units (produced and sold):
|
|
Total Annual
|
|
|
Costs
|
|
|
(150,000 units)
|
|
Direct material
|
$300,000
|
|
Direct labor
|
270,000
|
|
Manufacturing overhead
|
225,000
|
|
Selling, general, and administrative
|
150,000
|
|
Total
|
$945,000
|
Required
a. Compute Durant's unit selling price that will yield a profit t of $300,000, given sales of 150,000 units.
b. Compute Durant's dollar sales that will yield a projected 20 percent profit t on sales, assuming variable costs per unit are 60 percent of the selling price per unit and fixed costs are $420,000.
c.Of the $30 variable costs, 50 percent are from labor and 25 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent.