Parkins Company produces and sells a single product. The company's income statement for the most recent month is given below:

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Parkins Company produces and sells a single product. The company's income statement for the most recent month is given below:  
  Sales (8,000 units at $41 per unit) $328,000
  Less manufacturing costs:  
     Direct materials$64,000 
     Direct labor (variable)$80,000 
     Variable factory overhead$16,000 
     Fixed factory overhead$40,000$200,000
  Gross margin $128,000
  Less selling and other expenses:  
     Variable selling and other expenses$32,000 
     Fixed selling and other expenses$56,000$88,000
  Net operating income $40,000
There are no beginning or ending inventories.  
   
   
Required:  
a.Compute the company's monthly break-even point in units of product. (Round your answer to the nearest whole number.)  
b.What would the company's monthly net operating income be if sales increased by 24% and there is no change in total fixed expenses?  
c. What dollar sales must the company achieve in order to earn a net operating income of $60,000 per month? (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)  
d.The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 43 percent, but it will double the costs for fixed factory overhead. Compute the new break-even point in units. (Do not round intermediate calculations. Round your final answer to the nearest whole number.)  

 

    • 6 years ago
    Parkins Company produces and sells a single product
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