Problem;
Prokina Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $44.
Variable costs
Manufacturing ........................... $11 per unit
Selling ..................................... 4 per unit
Fixed costs
Manufacturing ........................... $168,000 per year
Selling and administrative .............. $235,100 per year
Required
Question 1: Use the per-unit contribution margin approach to determine the break-even point in units and dollars.
Question 2: Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $176,900.
Question 3: Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 20,200 units, how much could it pay in salaries for salespeople and still have a profit of $176,900? (Hint: Use the equation method.)
Note: Provide support for your rationale.