Items 1 and 2 are based on the following information:
|
Total Cost |
Unit Cost |
||
|
Sales (40,000 units) |
$1,000,000 |
$25 |
|
|
Raw materials |
160,000 |
4 |
|
|
Direct labor |
280,000 |
7 |
|
|
Factory overhead: |
|||
|
Variable |
80,000 |
2 |
|
|
Fixed |
360,000 |
||
|
Selling and general expenses: |
|||
|
Variable |
120,000 |
3 |
|
|
Fixed |
225,000 |
||
How many units does the company need to produce and sell to make a before-tax profit of 10% of sales?
- 65,000 units.
- 36,562 units.
- 90,000 units.
- 29,250 units.
Assuming that the company sells 80,000 units, what is the maximum that can be paid for an advertising campaign while still breaking even?
- $ 135,000
- $1,015,000
- $ 535,000
- $ 695,000