Question

Sandy Bank, Inc., makes one model of wooden canoe, and, the information for it follows: 500 850 Number of canoes produced and sold Total costs Variable costs Fixed costs Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $ 82,500 $178,500 $261,000 $115,500 $ 178,500 $ 294,000 $140, 250 $178,500 $318,750 $165.00 357.09 $ 522.89 $ 165.00 255.09 $ 420.ee $ 165.00 210.00 $ 375.00 Sandy Bank sells its canoes for $475 each. Required: 1. Suppose that Sandy Bank raises its selling price to $600 per canoe Calculate its new break-even point in units and in sales 2. If Sandy Bank sells 1,520 canoes, compute its margin of safety in units and as a percentage of sales. (Use the new sales prie $600.) 3. Calculate the number of canoes that Sandy Bank must sell at $600 each to generate $120,000 profit, Complete this question by entering your answers in 5 Required 1 Required 2 Required 3 Suppose that Sandy Bank raises its selling price to $600 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) Canoes New Break-Even Units Break-Even Sales Revenue

Answer 1

1.Contribution margin per unit = Selling price per unit - Variable cost per unit
=600-165 = $435
CM Ratio = CM/Sales
72.50%
Break even point in units = Fixed costs/CM Per unit
=178500/435
410	canoes
Sales Dollars = Fixed costs/CM Ratio
246,207
2.Margin of Safety in units = Sales units - break even units
=1520-410
1110	canoes
In Dollars = Total Sales - Break even sales dollars
665,793.10
3.Number of canoes = (120,000+178500)/435
686.2068966	canoes