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Computing break-even point

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Tanner Company's most recent contribution format income statement is presented below:
Sales $75,000; Variable expenses $45,000; contribution margin $30,000; fixed expenses $36,000; net operating loss $(6,000).

The company sells its only product for $15 per unit. There were no beginning or ending inventories.

Required: a) Compute the company's break-even point in units sold. b) Compute the total variable expenses at the break-even point. c) How many units would have to be sold to earn a target profit of $9,000? d) The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?

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Solution Preview

Tanner Company's most recent contribution format income statement is presented below:
Sales $75,000; Variable expenses $45,000; contribution margin $30,000; fixed expenses $36,000; net operating loss $(6,000).

The company sells its only product for $15 per unit. There were no beginning or ending inventories.

Required:
a) Compute ...

Solution Summary

The expert computes break-even points.

$2.19