A Company budgets for a production of 150000 units. The variable cost per unit is ¢14 and fixed cost per unit is ¢2 per unit. The company fixes the selling price to fetch a profit of 15% on cost.Required:What is the break- even point?B] What is the profit/volume ratio?C] If the selling price is reduced by 5%, how does the revised selling price affects the Break Even Point and the Profit/Volume Ratio?D] If profit increase of 10% is desired more than the budget, what should be the sales at the reduced price?

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Answered: A Company budgets for a production of…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EB: Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are...

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A Company budgets for a production of 150000 units. The variable cost per unit is ¢14 and fixed cost per unit is ¢2 per unit. The company fixes the selling price to fetch a profit of 15% on cost.

Required:

What is the break- even point?
B] What is the profit/volume ratio?
C] If the selling price is reduced by 5%, how does the revised selling price affects the Break Even Point and the Profit/Volume Ratio?
D] If profit increase of 10% is desired more than the budget, what should be the sales at the reduced price?

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