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Question # 1 Barhom’s Cellular (BC) is a distributor and sells phones for $1250. BC gets the...

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Accounting

Question # 1

Barhom’s Cellular (BC) is a distributor and sells phones for$1250. BC gets the phones for $900 each. BC pays the sales staff acommission of 10% for each phone sold. BC’s fixed selling,administrative & other fixed costs total $36,900 per year.

Required:

  1. How many phones BC needs to sell to achieve a target profit of$51,000 a year?

  1. BC is considering selling another type of phone. The new phonehas a cost of $1,400 and will be sold for $2,000 each. The salescommission policy will apply for the new phone too. Barhom expectsthat out of every four phones he sells one will be from the new oneand three from the old one. How many phones of each he needs tosell to breakeven.

Answer & Explanation Solved by verified expert
3.7 Ratings (339 Votes)
Answer a Selling price per unit 1250 Variable cost per unit Cost per unit Sales commission per unit Variable cost per unit 900 10 1250 Variable cost per unit 1025 Contribution margin per unit Selling price per unit Variable cost per unit Contribution margin per unit 1250 1025 Contribution margin per unit 225    See Answer
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