Parkins Company produces and sells a single product.The company's income statement for the most recent month is given below:
There are no beginning or ending inventories.
Required:
a.Compute the company's monthly break-even point in units of product.
b.What would the company's monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses?
c.What dollar sales must the company achieve in order to earn a net operating income of $50,000 per month?
d.The company has decided to automate a portion of its operations.The change will reduce direct labor costs per unit by 40 percent,but it will double the costs for fixed factory overhead.Compute the new break-even point in units.

Question

Parkins Company produces and sells a single product.The company's income statement for the most recent month is given below:  
There are no beginning or ending inventories.
Required:
a.Compute the company's monthly break-even point in units of product.
b.What would the company's monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses?
c.What dollar sales must the company achieve in order to earn a net operating income of $50,000 per month?
d.The company has decided to automate a portion of its operations.The change will reduce direct labor costs per unit by 40 percent,but it will double the costs for fixed factory overhead.Compute the new break-even point in units.

Quizplus · Accepted Answer

The Answer of Parkins Company produces and sells a single product.The company's income statement for the most recent month is given below:  
There are no beginning or ending inventories.
Required:
a.Compute the company's monthly break-even point in units of product.
b.What would the company's monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses?
c.What dollar sales must the company achieve in order to earn a net operating income of $50,000 per month?
d.The company has decided to automate a portion of its operations.The change will reduce direct labor costs per unit by 40 percent,but it will double the costs for fixed factory overhead.Compute the new break-even point in units.

Parkins Company Produces and Sells a Single Product