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Chapter 2: 2BP_b (page 145)

The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez鈥檚 autograph stamped on them. Each bat sells for \(35 and has a variable cost of \)22. There are \(97,500 in fixed costs involved in the production process.

b. Find the sales (in units) needed to earn a profit of \)262,500.

Short Answer

Expert verified

The number of units to be sold by the company to earn a profit of $262,500 is 12,692.31.

Step by step solution

01

Information given in the question

Selling price per unit: $35

Variable cost per unit: $22

Fixed cost: $97,500

Required profit: $262,500

02

Sales (in units)

Salesinunits=Profit+FixedcostRevenueperunit-Variablecostperunit=$262,500+$97,500$35-$22=27,692.31

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Most popular questions from this chapter

Dr. Zhiva虁go Diagnostics Corp.鈥檚 income statement for 20X1 is as follows:

Sales\( 2790000
Cost of goods sold1790000
Gross Profits\)1000000
Selling and administrative expenses302000
Operating profits\(698000
Interest Expense54800
Income before taxes\)643200
Taxes30%192960
Income after-tax$ 450240

Compute the profit margin for 20X1.

Jerry Rice and Grain Stores has \(4,780,000 in yearly sales. The firm earns 4.5 percent on each dollar of sales and turns over its assets 2.7 times per year. It has \)123,000 in current liabilities and $349,000 in long-term liabilities.

b. If the asset base remains the same as computed in part a, but total asset

turnover goes up to 3, what will be the new return on stockholders鈥� equity?Assume that the profit margin stays the same as do current and long-term

liabilities.

Baker Oats had an asset turnover of 1.6 times per year.

b. The following year, on the same level of assets, Baker鈥檚 assets turnoverdeclined to 1.4 times and its profit margin was 8 percent. How did the returnon total assets change from that of the previous year?

Dr. Zhiva虁go Diagnostics Corp.鈥檚 income statement for 20X1 is as follows

Sales\( 2790000
Cost of goods sold1790000
Gross profits\) 1000000
Selling and administrative expenses302000
Operating profits\( 698000
Interest Expense54800
Income before tax\) 643200
Taxes 30%192960
Income after tax$ 450240

b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2?

Explain how depreciation generates actual cash flows for the company.
See all solutions

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