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McKenzie Company Expects to Produce and Sell 1000 Units Next

Question 126

Essay

McKenzie Company expects to produce and sell 1000 units next month. Data on costs follows:
Per unit costs:
Selling sales price $8
Variable manufacturing costs $2.75
Variable selling costs $0.25
Total costs:
Fixed manufacturing costs $1,000
Fixed selling costs $ 125
A. Calculate the break-even point in units.
B. Calculate the break-even point in sales dollars.
C. Calculate the expected operating income for next month.
D. Calculate the margin of safety in dollars.
E. Calculate the break-even point in units if fixed manufacturing costs increase by $500.
F. Calculate the break-even point in units if variable manufacturing costs decrease by $0.75.

Correct Answer:

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A. Break-even point in units = $1,125 / ...

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