Question - Larson Co. produces telephone answering machines. At March 1, Larson estimates fixed costs related to production to be $700,000. The unit selling price, unit variable cost, and unit contribution margin for Larson Co. are as follows:
Unit selling price $75Unit
Variable cost 25Unit
Contribution margin $50
Instructions: Perform the following calculations assuming the facts given above, unless otherwise indicated. (Round to the nearest dollar.)
(1) Calculate the break-even point in units for Larson Co.
(2) Assume Larson Co. is contemplating paying $2,000 more to each of five factory supervisors. What would the new break-even point be if such a plan were put into action?
(3) What would the break-even point be if the cost of direct materials increased by $1.00 per unit?
(4) What would the break-even point be if the selling price increased to $77 per telephone answering machine?
(5) What is the sales volume necessary to earn a target profit of $300,000?