XX Company makes consumer electronics. Last year XX sold 25000 units at $25 each. Total costs equaled $525000, of which $150000 were fixed.
XX is considering replacing a compnanent part that had a cost of $2.50 with a new part costing $4.50 per unit next year. A new machine would be needed to increase plant capacity. This machine would coost 18000 with a useful life of 6 years, no salvage value. The company uses straight line depreciation on all plant assets (ignore income taxes).
Needed:
1. What is XX's break even point in units last year?
2. How many units would the company have to sell in the last year to earn $140000?
3.If mgmt holds the sales price constant and makes the new changes, how many units will the company need to sell to break even in coming year?
4.Same scenario as (3), but how many units to achieve same net income as previous year?
5. If XX wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increated direct-material cost?
my solutions are as follows (need to check for what I have):
1. 15000 units
2. 725000 units - not sure...
3-5...no idea