The Braggs & Strutting' Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units. $\begin{array}{lr}
\text { Sales } & \$ 1,600,000 \
\text { Less: Cost of goods sold } & 1,120,000\\text { Gross margin } & \$ 480,000 \
\text { Less: Operating expenses } & 100,000\\text { Income }&\$380,000
\end{array}$
Cost of goods sold consists of $810,000 of variable costs and $310,000 of fixed costs. Operating expenses consist of $30,000 of variable costs and $70,000 of fixed costs.
Required:
A. Calculate the break-even point in units and sales dollars.
B. Calculate the safety margin (in dollars).
C. Braggs & Struttin' received an order for 6,000 units at a price of $25.00. There will be no increase in fixed costs, but variable costs will be reduced by $0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order, assuming there is no opportunity costs.

Question

The Braggs & Strutting' Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units. $\begin{array}{lr}
\text { Sales } & \$ 1,600,000 \
\text { Less: Cost of goods sold } & 1,120,000\\text { Gross margin } & \$ 480,000 \
\text { Less: Operating expenses } &  100,000\\text { Income }&\$380,000
\end{array}$ 
Cost of goods sold consists of $810,000 of variable costs and $310,000 of fixed costs. Operating expenses consist of $30,000 of variable costs and $70,000 of fixed costs.
Required: 
A. Calculate the break-even point in units and sales dollars.
B. Calculate the safety margin (in dollars).
C. Braggs & Struttin' received an order for 6,000 units at a price of $25.00. There will be no increase in fixed costs, but variable costs will be reduced by $0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order, assuming there is no opportunity costs.

Quizplus · Accepted Answer

The Answer of The Braggs & Strutting' Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units. $\begin{array}{lr}
\text { Sales } & \$ 1,600,000 \
\text { Less: Cost of goods sold } & 1,120,000\\text { Gross margin } & \$ 480,000 \
\text { Less: Operating expenses } &  100,000\\text { Income }&\$380,000
\end{array}$ 
Cost of goods sold consists of $810,000 of variable costs and $310,000 of fixed costs. Operating expenses consist of $30,000 of variable costs and $70,000 of fixed costs.
Required: 
A. Calculate the break-even point in units and sales dollars.
B. Calculate the safety margin (in dollars).
C. Braggs & Struttin' received an order for 6,000 units at a price of $25.00. There will be no increase in fixed costs, but variable costs will be reduced by $0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order, assuming there is no opportunity costs.

The Braggs & Strutting' Company Manufactures an Engine for Carpet