Serendipity Sound Inc. Questions
Not what you're looking for?
Serendipity Sound, Inc. manufactures and sells compact discs. Price and cost data are as follows:
Selling price per unit (package of two CDs) $ 25.00
Variable costs per unit:
Direct material $ 10.50
Direct labor 5.00
Manufacturing overhead 3.00
Selling expenses 1.30
Total variable costs per unit $ 19.80
Annual fixed costs:
Manufacturing overhead $ 192,000
Selling and administrative 276,000
Total fixed costs $ 468,000
Forecasted annual sales volume (120,000 units) $ 3,000,000
In the following requirements, ignore income taxes.
Required:
1. What is Serendipity Sound's break-even point in units? (Do not round your intermediate calculations.)
Break-even point units
2. What is the company's break-even point in sales dollars? (Do not round your intermediate calculations.
Break-even point $
3. How many units would Serendipity Sound have to sell in order to earn $260,000?
Number of sales units
4. What is the firm's margin of safety? (Omit the "$" sign in your response.)
Margin of safety $
5. Management estimates that direct-labor costs will increase by 8 percent next year. How many units will the company have to sell next year to reach its break-even point?
Break-even point units
6. If the company's direct-labor costs do increase by 8 percent, what selling price per unit of product must it charge to maintain the same contribution-margin ratio? (Do not round intermediate calculations
Selling price $
Purchase this Solution
Solution Summary
The solution answers six questions on break-even points, selling price, margin of safety and number of sales units in an attached Word document.
Education
- B. Sc., University of Nigeria
- M. Sc., London South Bank University
Recent Feedback
- "Thank you."
- "thank you Chidi Ngene.. if you have any APA references would be great"
- "Thank you so much for your help, your explanations were easy to understand and apply!"
- "are you able to highlight the equations used either on the xlsx or a word doc as to how each graph was formed- overall looks fine i just need help understanding this myself"
- "Chidi Ngene, M. Sc. Was extremely helpful as without the help and guidance I would have failed, but with the help I passed. I still have a lot to learn and in need of the guidance to understand and learn more on the subject. I would recommend Chidi Ngene and BrainMass to anyone that are in need of help. Thank you!!"
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.