Answered: Variable expenses per unit: Direct…

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

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 29BEB: Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in...

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Variable expenses per unit: Direct Material $20
Direct Labour $50
Variable Manufacturing Overhead $10
Fixed expenses: Fixed Manufacturing Overhead $125,000
Fixed Selling Costs $75,000
Fixed Administrative Costs $100,000

selling price per unit 200
operating income 420000

the business is considering paying a commission to its sales team as part of the sales expansion effort, which should result in an increase in sales revenue. The head of the marketing department has indicated that the
effort of the sales team should result in a 15% increase in sales volume.
Calculate the new break-even sales figure, 2) the new
margin of safety and 3) the new operating profit, to determine whether the new sales commission plan is
indeed viable.

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