Please answer the finance question. The questions need to be answered within 1 h
ID: 2733847 • Letter: P
Question
Please answer the finance question. The questions need to be answered within 1 hour, that is the deadline. Please answer the question within 1 hour and show all your work. If you cannot show all of your work or do not know how to do the problems, then please do not answer the question.
3. Greshak Corp. produces and sells high-end entertainment systems. Its average selling price is currently $3,200 per system. Based on a review of its projected financial statements, the company's variable costs are $1,200 per unit sold and total fixed costs are $10,000,000. Based on this information, solve the following:
• A. Greshak's breakeven point in units?
• B. Greshak's breakeven in US dollars?
• C. Greshak's unit sales target if the company wants to make a profit of $3,500,000?
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Explanation / Answer
Answer:
We have been provided with the information as follow
Particular
Amount in $
Seeling Price
$3,200
Less:
Variable Cost
1200
Contribution Margin
$2,000
Fixed Cost= $ 10,000,000
• A. Greshak's breakeven point in units?
BEp=Fixed Cost /Contribution Margin Per Unit
=
Fixed Cost
10,000,000
Contribution Margin
2000
BEP
5000
BEp= 5000 units
• B. Greshak's breakeven in US dollars?
= Contribution Margin Per Unitin $ x BEP Sales
=2000 x 5000
=$ 10,000,000
• C. Greshak's unit sales target if the company wants to make a profit of $3,500,000?
Sales Target= Fixed Cost+ Targeted Profit/ Contribution Margin Per Unit
=10,000,000+3,500,000 /2000
= 6750 Units
Particular
Amount in $
Seeling Price
$3,200
Less:
Variable Cost
1200
Contribution Margin
$2,000