Third-in-Line, LLC had sales and costs last year as shown below. a What was the

Question

Third-in-Line, LLC had sales and costs last year as shown below. a What was the profit last year? b What is the break even quantity? c If the price, fixed cost and the variable cost per unit stay the same as last year, what will the quantity sold have to be this year to increase profits to $500,000? d If the sales quantity, price, and fixed cost stay the same as last year, what would the unit variable cost need to be this year to increase profits to $500,000? Sold units 40,000 Total Revenue $2,500,000 Total Variable cost $1,500,000 Total Fixed Cost $600,000 Third-in-Line, LLC had sales and costs last year as shown below. a What was the profit last year? b What is the break even quantity? c If the price, fixed cost and the variable cost per unit stay the same as last year, what will the quantity sold have to be this year to increase profits to $500,000? d If the sales quantity, price, and fixed cost stay the same as last year, what would the unit variable cost need to be this year to increase profits to $500,000? Sold units 40,000 Total Revenue $2,500,000 Total Variable cost $1,500,000 Total Fixed Cost $600,000

Explanation / Answer

a)

last year profit:

= $2,500,000-$1,500,000-$600,000

= $400,000

b)

contribution per unit:

= $1,000,000÷$40,000

= $25 per unit

c)

Required sales = (Fixed costs+Desired profit)/Contribution per unit

= ($600,000+$500,000)÷$25

= 44,000 units

d)

unit variable cost:

= ($2,500,000-$100,000)÷40,000

= $60 per unit

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.