Stewart Industries sells its finished product for $9 per unit. Its fixed operating costs are $20,000, and the variable operating cost per unit is $5. a. Calculate the firm’s….
Compute the weightedaverage unit contribution margin, assuming a constant sales mix.
Required: 
1.  Calculate Disk city’s breakeven point for the current year in number of video disks. (Round your answer to the nearest whole number.) 
Breakeven point  46,000 units 
2.  What will be the company’s net income for the current year if there is a 15 percent increase in projected unit sales volume? (Omit the “$” sign in your response.) 
Net income  2,185,000 $ 
3.  What volume of sales (in dollars) must Disk City achieve in the coming year to maintain the same net income as projected for the current year if the unit selling price remains at $23? (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the “$” sign in your response.) 
Volume of sales  7,895,522 $ 
4.  In order to cover a 30 percent increase in the disk’s purchase price for the coming year and still maintain the current contributionmargin ratio, what selling price per disk must Disk City establish for the coming year? (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the “$” sign in your response.) 
Selling price  28.84 $ 
rev: 02_27_2014_QC_45987, 03_22_2014_QC_45987
[The following information applies to the questions displayed below.] 
Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. 
Model no. 6754: 
Variable costs, $20.00 per unit 
Annual fixed costs, $985,900 
Model no. 4399: 
Variable costs, $11.80 per unit 
Annual fixed costs, $1,114,200 
Corrigan’s selling price is $64 per unit for the universal gismo, which is subject to a 10 percent sales commission. (In the following requirements, ignore income taxes.) 
2.
value: 10.00 points
Required: 
1.  How many units must the company sell to break even if Model 6754 is selected? (Do not round intermediate calculations and round your final answer to the nearest whole number.) 
Breakeven point  26, 221 units 
3.
value: 10.00 points
2a.  Calculate the net income of the two systems if sales and production are expected to average 42,000 units per year. (Omit the “$” sign in your response.) 
Net Income  
Model 6754  683,300 $ 
Model 4399  809,400 $ 
2b.  Which of the two systems would be more profitable?  

4.
value: 10.00 points
3.  Assume Model 4399 requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $430,000 and will be depreciated over a fiveyear life by the straightline method. How many units must Corrigan sell to earn $958,000 of income if Model 4399 is selected? As in requirement (2), sales and production are expected to average 42,000 units per year. (Do not round intermediate calculations and round your final answer to the nearest whole number.) 
Required sales  47,122 units 
5.
value: 10.00 points
4.  Ignoring the information presented in part (3), at what volume level will the annual total cost of each system be equal? (Round your answer to the nearest whole number.) 
Volume level 26,622  units 
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6.
value: 10.00 points
rev: 10_30_2013_QC_38310, 02_27_2014_QC_46037 7. value: 10.00 points
8. value: 10.00 points

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