Premium Beds is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Premium Beds fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price per unit$3,000.00 Per-unit variable costs: Invoice cost 2,218.80 Sales commissions 281.20 Total per-unit variable costs$2,500.00 Total annual fixed costs: Advertising$236,000 Rent 178,000 Salaries 386,000 Total annual fixed costs$800,000 The annual breakeven point in dollars is: $4,800,000. $4,500,000. $4,100,000. $4,600,000. $4,300,000.

The break-even point is important for business owners since it shows the lowest amount of sales…

Answered: Premium Beds is a retailer of luxury…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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Premium Beds is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Premium Beds fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below.


Sales price per unit	$	3,000.00
Per-unit variable costs:
Invoice cost		2,218.80
Sales commissions		281.20
Total per-unit variable costs	$	2,500.00
Total annual fixed costs:
Advertising	$	236,000
Rent		178,000
Salaries		386,000
Total annual fixed costs	$	800,000

The annual breakeven point in dollars is:

		$4,800,000.
		$4,500,000.
		$4,100,000.
		$4,600,000.
		$4,300,000.

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