How many garden sheds must the company sell to break even? 1 answer below »

(CVP) Seattle Leisure Designs has designed a new athletic suit. The company plans to produce and sell 30,000 units of the new product in the coming year. Annual fixed costs are $600,000, and variable costs are 70 percent of selling price. If the company wants a pre-tax profit of $300,000, at what minimum price must it sell its product?

(CVP) Sheridan Shacks makes portable garden sheds that sell for $1,800 each. Costs are as follows:

Per Unit

Total

Direct material

$800

Direct labor

90

Variable production overhead

60

Variable selling and administrative cost

50

Fixed production overhead

$200,000

Fixed selling and administrative

60,000

a. How many garden sheds must the company sell to break even?

b. If Sheridan Shacks’ management wants to earn a pre-tax profit of $200,000, how many garden sheds must it sell?

c. If Sheridan Shacks’ management wants to earn a pre-tax profit of $280,000, how many garden sheds must it sell?

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