Question - Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income
Prachi Company produces and sells disposable foil baking pans to retailers for $2.60 per pan. The variable cost per pan is as follows:
Direct materials $0.25
Direct labor 0.55
Variable factory overhead 0.62
Variable selling expense 0.13
Fixed manufacturing cost totals $192,377 per year.
Administrative cost (all fixed) totals $26,233.
Required:
1. Compute the number of pans that must be sold for Prachi to break even.
2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent.
3. How many units must be sold for Prachi to earn operating income of $8,820?
4. How much sales revenue must Prachi have to earn operating income of $8,820?