Please answer all the questions above *Exercise D3-8 Reid Recreation Products se
ID: 2331338 • Letter: P
Question
Please answer all the questions above
*Exercise D3-8 Reid Recreation Products sells the Amazing Foam Frisbee for $20. The variable cost per unit is $11; fixed costs are $44,000 per month. What is the annual breakeven point in units? In sales dollars? (Use your answer of breakeven units to calculate the breakeven point in dollars. Round answers to o decimal places, e.g. 5,275.) The breakeven point The breakeven sales How many frisbees must Reid sell to earn $23,000 in operating income? (Round answer to O decimal places, e.g frisbees 5,275.) frisbees what operating income must Reid earn to realize net income of $17,800, assuming that the company is in the 27% tax bracket? (Round answer to O decimal places,e.g. 5,275.) Operating income How many frisbees must Reid sell to earn $17,800 in net income, assuming that the company is in the 27% tax bracket? (Round answer to o decimal places, e.g. 5,275.) frisbeesExplanation / Answer
1
Per unit
%
Sales
20
100%
Less: variable cost
11
55.0%
Contribution Margin
9
45.0%
Break even point in unit
=Fixed cost / Contribution margin per unit
=44,000 /9 per unit
=4889 Frisbees
Break even point in dollar
=Fixed cost / Contribution margin ratio
=44,0000 /45%
=$97,778
Break even point
4889
Frisbees
Break even sales
97778
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2
sell of friesbees for earning $23,000 profit
==Fixed cost+ desired profit / Contribution margin per unit
=44,000+23000 /9 per unit
=7,444 Frisbees
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3
Operating income =Net income+ tax
OI =17,800 +27%OI
OI -0.27OI =17800
0.73 OI =$17,800
OI =17800/0.73
OI=24,384
Operating income =$24,283
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Friesbess to sell for earning $17,800 income
20x-11x-44,000=24,384
9x-44,000=24,384
9x =24384+44000
9x =68,384
x =68384/9
x=7598 units
Per unit
%
Sales
20
100%
Less: variable cost
11
55.0%
Contribution Margin
9
45.0%