Thermal Tent

# Thermal Tent - Problem 20.1 A Setting Sales Price and Computing the Break-Even Point Thermal Tent Inc is a newly organized manufacturing business

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Problem 20.1 A: Setting Sales Price and Computing the Break-Even Point Thermal Tent Inc. is a newly organized manufacturing business that plans to manufacture and sell 50,000 units per yr. of a new product. The following estimates have been made of the company’s costs and expenses (other than income taxes). Fixed Variable per Unit Manufacturing costs: Direct materials………………………… \$47 Direct labor……………………………. . \$32 Manufacturing overhead……………. .... \$340,000 \$ 4 Period costs: Selling expenses………………………. \$1 Administrative expenses……………… \$200,000 TOTALS……………………………………. .= \$540,000 = \$84 Instructions: a.) What should the company establish as the sales price per unit if it sets a target of earning an operating income of \$260,000 by producing and selling 50,000 units during the first year of operations? (Hint: First compute the required contribution margin per unit.) Desired sales = fixed cost + desired operating income

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## This note was uploaded on 01/05/2012 for the course 101 melissa jo taught by Professor Acc101 during the Spring '11 term at Aarhus Universitet.

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Thermal Tent - Problem 20.1 A Setting Sales Price and Computing the Break-Even Point Thermal Tent Inc is a newly organized manufacturing business

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