Please submit on a separate sheet of paper, can be done in Excel or Word.
The Robinson Lawn Chair Company produces and sells a single high-priced lawn chair and in fiscal 2015 the company produced and sold 30,000 units. The 2015 income statement of the company reported the following:
Determine the following items:
1. Calculate the per unit figures for each item from the information provided above. Determine which of these figures is needed for performing C-V-P analysis. (Note, for example, that fixed costs per unit are of no use in determining breakeven points since it is total fixed costs that are needed for calculations.)
2. Compute the breakeven point in units for fiscal 2015.
3. Determine the company's margin of safety in units for fiscal 2015.
4. If the company's sales in units were to increase 30%, how much would profits increase in percentage terms?
5. Compute the sales level required in units to achieve a level of profits of $270,000.
6. Assume the company is expecting to experience a shortage of its main raw material. This situation is expected to result in an increase in the company's manufacturing costs of $3 per unit. Under this circumstance, and assuming that the company does not believe that it can increase its selling price, determine the company's breakeven point and new safety margin.
7. Management has decided to raise the price of its product to $65 per unit. It also will spend an additional $102,000 per year for advertising. Although it has never paid commissions before, the company has decided to begin paying sales personnel $1 per unit for every unit sold. Determine the new breakeven point. Also determine the safety margin of the company under this plan if sales only reach 27,000 units. Note: in calculating your solution, ignore question #6 and solve this question starting with the original data above.