Our team is hired by Apple to help assess whether or not to continue to manufacture and sell an older model of the iPhone. Apple explains that this model continues to sell well in foreign markets but it worries that fixed costs are so large that it is difficult to earn a profit. The Tableau Dashboard is provided to aid our analysis of this model.

 Tableau DA 5-2: Exercise, Computing break-even, target income, and margin of safety LO C2

Our team is hired by Apple to help assess whether or not to continue to manufacture and sell an older model of the iPhone. Apple explains that this model continues to sell well in foreign markets but it worries that fixed costs are so large that it is difficult to earn a profit. The Tableau Dashboard is provided to aid our analysis of this model.

 

 

Explanation

1.
$35,100,000(fixed costs*) / $450(contribution margin**) = 78,000 units break-even.
*$10,250,000 + $8,500,000 + $6,000,000 + $5,350,000 + $5,000,000 = $35,100,000
**$750(selling price) − $300(variable cost per unit) = $450

2.
Units to be sold = ($35,100,000 + $9,000,000) / $450 = 98,000 units

3.
Dollar value of sales = ($35,100,000 + $9,000,000) / 0.6 = $73,500,000
 

Here is the fixed cost details as available to these pics are:

 

Equipment Depreciation	5,350,000
Office salaries	6,000,000
Rent	10,250,000
Supervisor salaries	8,500,000
Property taxes	5,000,000
Total Fixed costs	35,100,000

Here is the variable cost  per unit

Speaker	25
Screen	95
Receiver	35
Internal Component	90
Camera	45
Battery	10
Total	300

 

Sale price per unit 750

 

I hope, you will easily understand this question now. If you have any questions, Please feel free to ask.

Thanks