Question

Lawn Master Company, a manufacturer of riding lawn mowers, has a projected income for the coming year as follows: Sales $ 44,000,000 Operating expenses: Variable expenses $ 28,600,000 Fixed expenses 7,700,000 Total expenses 36,300,000 Operating profit $ 7,700,000 Required: 1. Determine the breakeven point in sales dollars. 2. Determine the required sales in dollars to earn a before-tax profit of $9,152,500. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) 3. What is the breakeven point in sales dollars if the variable expenses increases by 9%

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Sales $44,000,000

Variable expenses $ 28,600,000

Fixed expenses 7,700,000

To calculate the break-even point in dollars, we need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 7,700,000 / [(44,000,000 - 28,600,000)/44,000,000]

Break-even point (dollars)= $22,000,000

Now, we incorporate the desired profit of $9,152,500

Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio

Break-even point (dollars)= (7,700,000 + 9,152,500) /0.35

Break-even point (dollars)= $48,150,000

Finally, the new break-even point in dollars:

Total variable cost= 28,600,000*1.09= 31,174,000

Break-even point (dollars)= 7,700,000 / [(44,000,000 - 31,174,000) / 44,000,000]

Break-even point (dollars)= 7,700,000 / 0.2915

Break-even point (dollars)= $26,415,094.34

Answer 2

Please see attached

Step-by-step explanation:

• Break even point in sales dollars $22,000,000

• Required sales in dollars $48,150,000

• Break even point in sales dollars $34,010,600

See as attached, detailed solution to the questions above.