Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it f

Question

Sandy Bank, Inc., makes one model of wooden canoe. And, the information for it follows: Number of canoes produced and sold Total costs 600 800 950 Variable costs Fixed costs $129,000 $172.000 $204,250 $228,000 $228,000 $228,000 $357,000 $400,000 $432,250 Total costs Cost per unit $ 215.00 215.00 ariable cost per unit Fixed cost per unit Total cost per unit 215.00 240.00 $595.00 500.00 $ 455.00 380.00 Required 1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars. (Do not round intermediate calculations. Round your final answers to nearest whole number.) New Break-Even Units Canoes Break-Even Sales Revenue 2. If Sandy Bank sells 1,620 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of S500.) (Round your answers to the nearest whole number.) Margin of Safety Percentage of Sales 3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $140,000 proft. (Round your answer to the nearest whole number) Sales Units Canoes

Explanation / Answer

1) New break even point = 228000/(500-215) = 800 units

Break even sales revenue = 800*500 = 400000

2) Margin of safety = 1620-800 = 820 units

Margin of safety value = 820*500 = 410000

Percentage of sales = 410000*100/810000 = 51%

3) Target sales units = (228000+140000) / 285 = 1291 units

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