Breed Products has performed extensive studies on its costs and production and e

Question

Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 161,000 units (produced and sold): Direct material Direct labor Manufacturing overhead Selling. general, and administrative Total Annual Costs (161,000 units) S 290,000 254,000 221,000 148,000 Total S 913,000 Required: a. Compute Breed's unit selling price that will yield a profit of $487,700, given sales of 161,000 units. (Round your answer to 2 decimal places.) Selling price per unit b. Compute Breed's dollar sales that will yield a projected 21 percent profit on sales, assuming variable costs per unit are 52 percent of the selling price per unit and fixed costs are $558,900. Breed's dollar sales c. Management believes that a selling price of $7.80 per unit is reasonable given current market conditions. How many units must Breed sell to generate the revenues (dollar sales) determined in requirement (b)? (Round your final answer to nearest whole unit.) r of units

Explanation / Answer

a Selling price = (Total costs+Profit)/161000 = (913000+487700)/161000= $8.7 per unit b Let the dollar sales be X 0.21X = (1-0.52)X-558900 0.21X = 0.48X-558900 0.27X = 558900 X = $2070000 Breed's dollar sales = $2070000 c Number of units = 2070000/7.8= 265385

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