1 2 3 Sturgis LLC sells cars and trucks The unit sales for t

Sturgis LLC sells cars and trucks. The unit sales for trucks were 100,000 and the contribution margin was 200,000. For cars the unit sales were 120,000 and the contribution margin was $240,000. If fixed costs are 220,000 how many cars are needed to breakeven? Select one: a.59,500 o b. 60,500 .61.500 d. None of the above

Solution

1) Answer : d. None of the above

=> Cars needed to break even = $220000 / ($200000 / 100000) + ($240000 / 1200000 = $220000 / $2 + $2 = 55000 cars

2) Selling salaries are in \" b. Selling and administration budget\"

This is because it is a part of Selling and administration budget.

3) Desired ending inventory is a part of the \"Production budget\".

This is because we have to make adjustment of the desired ending inventory in the Units production during the period. ie. Prodution during the period = Expected units sold - Expected opening inventory + desired ending inventory.

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