# Sandy Bank, Inc., makes one model of wooden canoe (A+ Guaranteed)

Sandy Bank, Inc., makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold 500 700 850
Total costs
Variable costs \$ 82,500 \$ 115,500 \$ 140,250
Fixed costs 178,500 178,500 178,500
Total costs \$ 261,000 \$ 294,000 \$ 318,750

Cost per unit
Variable cost per unit \$ 165.00 \$ 165.00 \$ 165.00
Fixed cost per unit 357.00 255.00 210.00

Total cost per unit \$ 522.00 \$ 420.00 \$ 375.00

Sandy Bank sells its canoes for \$450 each.

Required:

1. Suppose that Sandy Bank raises its selling price to \$600 per canoe. Calculate its new break-even point in units and in sales dollars. (Round your “Unit” answer to the nearest whole number. Round your intermediate calculations to whole dollars and percentages.)

2. If Sandy Bank sells 1,520 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of \$600.) (Round your answers to the nearest whole number.)

3. Calculate the number of canoes that Sandy Bank must sell at \$600 each to generate \$120,000 profit. (Round your answer to the nearest whole number.)

Here’s the SOLUTION

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