Superior Door Company sells pre-hung doors to home builders. The doors are sold for $60 each. Variable costs are $42 per door and fixed costs total $450,000 per year. The company is currently selling 30,000 doors per year.
1. What are the variable expenses per unit?
2. Using the equation method:
A. What is the break-even point in units and in sales dollars?
B. What sales level in units and in sales dollars is required to earn an annual profit of $90,000?
C. Assume that through negotiations with the manufacturer the Super Sales Company is able to reduce it's variable expenses by $3 per unit.What is the company's new break-even point in units and in sales dollars?
3. Repeat question 2 using the formula method.