Werner company produces and sells disposable foils baking pans to retailers for $2.75 per pan. The variable cost per pan is as follows: direct material 0.37, direct labor 0.63, variable factory...

Werner company produces and sells disposable foils baking pans to retailers for $2.75 per pan. The variable cost per pan is as follows: direct material 0.37, direct labor 0.63, variable factory overhead 0.53, variable selling expense 0.12, fixed manufacturing cost total $111,425 per year. admistrative cost (all fixed) totals $48,350. How many pans must be solded for Werner to earn operating income of $13,530?

Asked on by sharmel1

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caledon | High School Teacher | (Level 3) Senior Educator

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Target Profit = 13530.00

Fixed costs = 111425 + 48350 = 159775.00

Total income required = 159775 + 13530 = 173305.00

Pan sale price: 2.75

Per pan costs: 0.37 + 0.63 + 0.53 + 0.12 = 1.65

Per pan profit: 2.75 - 1.65 = 1.10

How many times do I have to make a profit of 1.10 in order to have a total of 173305?

173305/1.10 = 157,550 pans

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