# Johnson, Inc. projects sales f

Johnson, Inc. projects sales for next year will be 55,000 unitsif the sales price is \$27.50. At this level, unit fixed costs willbe \$8.30 while total variable costs will be \$693,000. The vicepresident of marketing advises management to reduce sales price to\$26.00 and to undertake a national advertising campaign costing\$12,000.

1. What is the breakeven point for the company in terms of dollarsand units before giving effect to the vice president’s plan?
2. What is the breakeven point in units after giving effect to theplan?
3. The vice president believes that his plan will result in abefore tax earnings of \$56,000. How many units must be sold toreach this earnings level?

 Working Note1: Total Per Unit No. of Units 55,000 Sales 1,512,500 27.50 Less: Variable cost 693,000 12.60 Contribution margin 819,500 14.90 Less: Fixed cost 456,500 Net Income 363,000 Contribution margin ratio 54.18% a) Break Even (Dollars) = Fixed cost /contribution margin ratio =456600/54.18% 842,534 Break Even (Unit ) = Fixed cost /contribution margin per unit =456600 /14.9 30,644 Units Working Note2: After Affect of Vicepresident Total Per Unit No. of Units 55,000 Sales 1,430,000 26.00 Less: Variable cost 693,000 12.60 Contribution margin 737,000 13.40 Less: Fixed cost 468,500 Net Income 268,500 Contribution margin ratio 51.54% b) Break Even (Dollars) = Fixed cost /contribution margin ratio =468500/51.54% 909,030 Break Even (Unit ) = Fixed cost /contribution margin per unit =468500 /13.4 34,963 Units c) Target Units = (Total fixed cost +Target income / contribution margin per unit) =(468500 +56000)/13.4 39,142 Units

##### "Our Prices Start at \$11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"

Pages (275 words)
Standard price: \$0.00
Client Reviews
4.9
Sitejabber
4.6
Trustpilot
4.8
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back