Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business earned Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering the implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for variable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $58 Direct Labour $74 Variable Manufacturing Overhead $48 Fixed expenses: Fixed Manufacturing Overhead $215,000 Fixed Selling Costs $65,000 Fixed Administrative Costs $160,000 c) Calculate Benoit’s break-even point in units and in sales dollars. d) Calculate the margin of safety in units and in sales dollars.
Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following
information to a single part which is used in the production of a wind instrument. The business earned
Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under
pressure from shareholders to increase operating income in 2020 and is therefore considering the
implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for
variable cost per unit and total fixed costs were as follows:
Variable expenses per unit: Direct Material $58
Direct Labour $74
Variable Manufacturing Overhead $48
Fixed expenses: Fixed Manufacturing Overhead $215,000
Fixed Selling Costs $65,000
Fixed Administrative Costs $160,000
c) Calculate Benoit’s break-even point in units and in sales dollars.
d) Calculate the margin of safety in units and in sales dollars.
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