Final Answer:
Songsu's sales volume last year was approximately 1714.29 units.
The relevant range for Songsu's company is between 1085.71 units and 1,000 units.
Step-by-step explanation:
Sales Volume:
Step 1: Calculate the contribution margin per unit:
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin per unit = $6.75 - $5
Contribution margin per unit = $1.75
Step 2: Calculate the total contribution margin:
Total contribution margin = Operating income + Fixed costs
Total contribution margin = $1,100 + $1,900
Total contribution margin = $3,000
Step 3: Calculate the sales volume:
Sales volume = Total contribution margin / Contribution margin per unit
Sales volume = $3,000 / $1.75
Sales volume = 1714.29 units
Therefore, Songsu's sales volume last year was approximately 1714.29 units.
Relevant Range:
Step 1: Determine the minimum sales volume:
Minimum sales volume = Fixed costs / Contribution margin per unit
Minimum sales volume = $1,900 / $1.75
Minimum sales volume = 1085.71 units
Step 2: Determine the maximum sales volume:
Maximum sales volume = Production capacity
Maximum sales volume = 1,000 units
Therefore, the relevant range for Songsu's company is between 1085.71 units and 1,000 units.
Complete question:
Songsu's small business can produce up to 1,000 units. He looks at his profit information from the past year and notes the following:
- Sales of $6,750,
- Variable cost per unit of $5,
- Fixed costs of $1,900,
- Operating income of $1,100.
What was Songsu's sales volume last year?
What is the company's relevant range?