Freida Company sells product AB16

Subject:AccountingPrice: Bought3

Share With

Freida Company sells product AB16. In the current month the company sold a total of 35,000 units and earned $1925000 as sales. The variable cost per unit is $18.75. The company incurs a fixed cost of $300,000 per month.
Required:
i. Calculate BEP in sales and Dollars both
ii. Prepare the Contribution Margin Income Statement for Freida Company.
iii. How many units of products the company must sell in order to attain a profit of $85,000?
iv. The manager of Freida Company predicts that by decreasing selling price per unit by 12%, and using higher quality of raw material (that will in turn increase raw material cost per unit by $8.00), the unit sales will increase at least by 8%. Should the company go with the managers
decision? Explain your answer.
v. Assume that for a lower than usual demand, the sales of Freida Company has decreased by
5000 units. By how much the fixed cost must be reduced to, in order to maintain the current net
income/profit?