Solomon company is considering adding a new product. the costaccountant has provided the followng...

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Accounting

Solomon company is considering adding a new product. the costaccountant has provided the followng data:
Expected variable cost ofmanufacturing $ 43 per unit
Expected annual fixedmanufacturing costs $ 60,000

The administrative vice president has provided the followingestimates:
Expected sales commission $ 5 per unit
Expected annual fixedadministrative costs $
52,000

The manager has decided that any new product must at least breakeven in the first year.
Required
Use the equation method and consider each requirementseparately.
If the sales price is set at $64, how many units must Solomonsell to break even?
Solomon estimates that sales will probably be 14,000 units. Whatsales price per unit will allow the company to break even?
Solomon has decided to advertise the product heavily and has setthe sales price at $68. If sales are 8,000 units, how much can thecompany spend on advertising and still break even?

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4.2 Ratings (688 Votes)

Total variable costs per unit Expected variable cost of manufacturing per unit Expected sales comission per unit 43 5 48 Total fixed costs Expected annual fixed manufacturing See Answer

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In: AccountingSolomon company is considering adding a new product. the costaccountant has provided the followng data:...Solomon company is considering adding a new product. the costaccountant has provided the followng data:Expected variable cost ofmanufacturing$43per unitExpected annual fixedmanufacturing costs$60,000The administrative vice president has provided the followingestimates:Expected sales commission$5per unitExpected annual fixedadministrative costs$52,000The manager has decided that any new product must at least breakeven in the first year.RequiredUse the equation method and consider each requirementseparately.If the sales price is set at $64, how many units must Solomonsell to break even?Solomon estimates that sales will probably be 14,000 units. Whatsales price per unit will allow the company to break even?Solomon has decided to advertise the product heavily and has setthe sales price at $68. If sales are 8,000 units, how much can thecompany spend on advertising and still break even?