Jones sells a single product with fixed costs of $405,000 per year.
SP = $120
Variable manufacturing costs = 60
Variable sales commission = 5% of sales
What is contribution margin?
What is the contribution margin ratio?
How many units must be sold to break even?
How many units must be sold to make $50,000 before taxes?
How many units to make $30,000 after taxes?
What is net income if we sell 9,000 units?
Jones is selling 8,000 units- They believe cutting the price $4 per unit will increase sales by 15%. Should they do it? Show income both ways.
They can buy a machine that will increase fixed costs $90,000 but decrease variable costs $4 per unit. If they can sell 9,000 units either way, should they buy the machine? Show income.
They are considering removing the sales commission. If they are selling 9,000 units now how much can salaries increase and the company still be as well off if sales remain the same?