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Unformatted text preview: 2. Decrease in salaries by $20,000 (Increase FC) 3. Sales increase by 20% New CM: 600 units (500 x 1.2) x 150 (500 350) Old CM: 500 units x 200 (500 300) Decrease in CM 90,000-Decrease in FC Saving 20,000 100,000 Increase in NI <10,000> 20,000__ 10,000 E. Change SP. Bulk Sales Over and above sales Should we do this? Yes. VC/unit stays the same FC stays the same What should we charge? The lowest price would be VC = $300 IV. Break Even Point Total Sales = Total Costs (FC + VC) Total CM = Total FC Number of units to produce and sell in order to have $0 income BEP (in units) = FC/Unit CM (SP-VC) BEP (in sales) = FC/CMR Example: 80,000/200 (500 300) = 400 bikes 80,000/0.40 (200/500) = $200,000 Use CMR to determine BEP when you have multiple product lines V. Target Profit Analysis In units = FC + NI/Unit CM In sales = FC + NI/CMR...
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This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.
- Spring '08