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Breed Products has performed extensive studies on its costs and production and estimates the following annual...

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Accounting

Breed Products has performed extensive studies on its costs andproduction and estimates the following annual costs based on165,000 units (produced and sold):

Total Annual Costs
(165,000 units)
Direct material$282,000
Direct labor255,000
Manufacturing overhead216,000
Selling, general, andadministrative139,000
Total$892,000

Required:

a. Compute Breed’s unit selling price that willyield a profit of $560,000, given sales of 165,000 units.(Round your answer to 2 decimal places.)

b. Compute Breed’s dollar sales that will yielda projected 20 percent profit on sales, assuming variable costs perunit are 50 percent of the selling price per unit and fixed costsare $651,000.

c. Management believes that a selling price of$7.80 per unit is reasonable given current market conditions. Howmany units must Breed sell to generate the revenues (dollar sales)determined in requirement (b)? (Round your finalanswer to nearest whole unit.)

Answer & Explanation Solved by verified expert
4.3 Ratings (946 Votes)

Solution A
Description Amount
Direct Material            282,000
Direct labor            255,000
Manufacturing overhead            216,000
Selling and general overhead            139,000
Required Profit            560,000
Requisite Sale proceeds        1,452,000
No of units            165,000
Unit Selling price                  8.80
Solution B
Sale Price                   100
Profit                      20
Variable cost                      50
Contribution required to meet profit and fixed cost                      30
Fixed cost            651,000
Required Dollar Sale 651000/30%
Required Dollar Sale        2,170,000
Solution C
Total Dollar Sale        2,170,000
Unit Selling price                  7.80
Total Units Sold 2170000/7.80
Total Units Sold            278,205

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