Hurst Co manufactures and sells a single product. Price and cost data regarding this product are as follows:
Selling Price $ per unit
Variable Manufacturing Costs $ per unit
Variable SGA $ per unit
Expenses:
Fixed MOH $ per year
Fixed SGA $ per year
Required:
a What is the breakeven point in units per year?
b How many units need to be sold to earn an annual operating income equal to of Sales?
c In the current year, the company sold units. Due to competition, management will be
forced to lower the selling price by next year. How many units must be sold next year to earn the
same operating income as was earned in the current year?
d Provide potential options for reducing the number of breakeven units calculated above
other than increasing or keeping the same sales price.
