Cost structure

You are currently trying to decide between two cost structures for your business: one that has a greater proportion of short-term fixed costs and another that is more heavily weighted to variable costs. Estimated revenue and cost data for each alternative are as follows:

 Cost Structure: Selling price per unit Variable cost per unit Short-term fixed costs per year Alternative 1 100 75 60000 Alternative 2 100 70 65000

Required:
1. What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same?
2. Suppose your profit goal for the coming year is 5% of sales (i. E. , operating profit/sales = 5%). What sales level in units is needed under each alternative to achieve this goal?
3. Suppose again that your profit goal for the coming year is 5% of sales. What sales volume in dollars is needed under each alternative to achieve this goal?

a =  1000
p1 =  2405
p2 =  2170

Step-by-step explanation:

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