Valencia Manufacturing Company manufactures and sells musical gadgets. You have just begun your summer internship at Valencia Manufacturing. To expand sales, the business is considering paying a commission to its sales team. You have been asked to compute 1) the new break-even sales figure, and 2) the operating profit if sales increase by 10% under the new sales commission plan. She is confident that you can handle the task, because you learned CVP analysis in your accounting class. The following data was obtained: Selling price per unit $200 Variable expenses per unit: Direct Material $40 Fixed expenses: Production/Sales Direct Labour $32 Variable Manufacturing Overhead $18 Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs $190,000 $115,000 $135,000 6,000 Units
Valencia Manufacturing Company manufactures and sells musical gadgets. You have just begun your summer internship at Valencia Manufacturing. To expand sales, the business is considering paying a commission to its sales team. You have been asked to compute 1) the new break-even sales figure, and 2) the operating profit if sales increase by 10% under the new sales commission plan. She is confident that you can handle the task, because you learned CVP analysis in your accounting class.
The following data was obtained:
Selling price per unit $200 Variable expenses per unit: Direct Material $40
Fixed expenses:
Production/Sales
Direct Labour $32 Variable Manufacturing
Fixed Manufacturing Overhead Fixed Selling Costs
Fixed Administrative Costs
$190,000 $115,000 $135,000
6,000 Units
Find the break-even in sales
find the operating profit before and after the fixed cost adjustments
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