Prachi Company produces and sells disposable foil baking pans to retailers for $2.45 per pan. The variable costs per pan are as follows:
DM $0.27
DL 0.58
Variable overhead 0.63
Selling 0.17
Fixed manufacturing costs total $131,650 per year. Administrative costs (all fixed) total $18,350.
Required:
1.Compute the number of pans that must be sold for Prachi to break even.
2.How many pans must be sold for Prachi to earn a before-tax profit of $12,600?
3.What is the unit variable cost? What is the unit variable manufacturing cost? Which is used in c-v-p analysis and why?
4.Assuming a tax rate of 40%, how many pans must be sold to earn an after-tax profit of $25,200?