ACC 381Chapter 3 – HO #1
1. Appliance Possible, Inc. (AP) is a manufacturer of toaster ovens. The following data are
available for AP’s expected costs at production levels of 100,000 units. Ap’s tax rate is 40%.
Variable Costs:
Manufacturing
Administrative
Selling
$6 per unit
$4 per unit
$3 per unit
Fixed Costs
Manufacturing
Administrative
$160,000
$ 80,000
If AP sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of
$60,000 after taxes?
2. In 2021, Jaguar Company had a breakeven point of $350,000 based on a selling price of $5 per
unit and fixed costs of $112,000. In 2022, the selling price and the variable costs per unit did not
change, but the breakeven point increased to $420,000.
a) Compute the variable costs per unit and the contribution margin ratio for 2021.
b) Compute the increase in fixed costs for 2022.
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