Company A makes and sells laser printer accessories. One of the company’s products, a printer cartridge, sells for $50 per unit. Variable expenses are $38 per cartridge and fixed expenses associated with the product are $24000 per month.
Questions:
(a) Compute A company’s monthly break-even point in number of cartridge.
(b) Compute A company’s monthly break-even point in total sales dollars.
(c) How many cartridges would need to be sold to generate after-tax operating income of $22,000 each month if the tax rate is 25%?
(d) A new union contract will come into effect next year, resulting in higher wages for all production employees. Assuming sales prices and fixed expenses remain unchanged, will the new union contract result in a higher or lower break-even point? Explain.
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