Scholes Sysems supples a gartcusr bpe of ofce char to large

Scholes Sysems supples a gartcusr bpe of ofce char to large retailers such as Target Costce, ans omice Max Scholes s concemed abeut the possiole cfects of gn ts cperaiones, Phesently, he company sets 80 0 units for $60 per unt The vanable production costs are $30, and ftwed costs amount to $1,400.000 Proucson engineers percent in the coming year or the $50 varable costs, 50 percent are trom labor and 25 percent are from materials aso expected hat fixed costs wa nse by 5 percent as a resut of increased taxes and other miscelianeous fwed charpes have advised management hat they expect unit tabor cois to rse by 15 percent and unit materiab costs to nse by 10 . Vaniable overmead costs ave expected to increase by 20 pecent Sales prices cannot increase more than to peicest it s p The company wishes to mairtan the same level of peole in seal dollasr terms. it is expected that to accomplish this objective. profts must incnease by 6 pescent during the year Required: a Compute the volume in unts and the dolar sales level mecessay to mantain the present profte lever, assuming that the masimum price increase is implemented (Do not round intermediate calculations Round up your answer tor i uits\" so the pearest whole number and round your antwer for Sales\" to the nearest whole dolar anount) Volume in Sales Compute the vure of Sales ad te alar sa es ,vel necessary to provide the 6 per ent mease n prons assumo mane mar answer for Volume in units\" to the nearest whole number and round your answer for \"Sales\" to the nearest whoie dollar amount pce increase s Volume in e. it the voume of saes were to reman at s0.000 unts,what price change would be required to attain the 6 pencent increase in prots? Cakculate the sew prce (0o not round insermediate cakculations. Round your answer to 2 decimal places)

Solution

Current sales Per unit 60000 sets Sales 60 3600000 Less: Variable costs: Labor 15 900000 Materials 7.5 450000 Var. OH 7.5 450000 Total 30 1800000 Contribution 30 1800000 Less: Fixed costs 1400000 Net income 400000 a. Fixed costs 1470000 Net Income to be maintained 400000 Total $ Contribution reqd. 1870000 Sales price (maximum--60*1.1) 66 Per unit variable cost 34.5 Contribution/unit 31.5 So. No.of units to be sold =1870000/31.5= 59365.08 or 59366 units ANSWER: Volume in units 59366 $ Sales at 66/unit 3918156 b… Fixed costs 1470000 Net Income to be maintained(400000*1.06) 424000 Total $ Contribution reqd. 1894000 Sales price (maximum--60*1.1) 66 Per unit variable cost 34.5 Contribution/unit 31.5 So. No.of units to be sold =1894000/31.5= 60126.98 or 60127 units ANSWER: Volume in units 60127 $ Sales at 66/unit 3968381 c… Fixed costs 1470000 Net Income to be maintained(400000*1.06) 424000 Total $ Contribution reqd. 1894000 No.of units to be sold 60000 So,per unit contribution(1894000/60000)= 31.57 Total Variable cost/unit 34.5 So, selling price/unit(34.5+31.57)= 66 Answer: New price 66