Ch10_Solution- Holden book Ch16

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Illinois State University *

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341

Subject

Accounting

Date

May 4, 2024

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xlsx

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7

Uploaded by DoctorHippopotamus9533

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Based On Accounting Profit Inputs Fixed Costs $30,000 30 Sales Revenue / Unit $6.00 6 Variable Costs / Unit $4.00 4 Calculate the Break-even Point using the Formula Break-even Point (Unit Sales) 15,000 Break-Even point (units) = Fixed Costs ÷ (Sales revenue per unit – Variable costs per u Back solve for the Break-even Point using the Income Statement Unit Sales 12,000 Sales Revenue $72,000 Variable Costs $48,000 Gross Margin $24,000 Fixed Costs $30,000 Accounting Profit ($6,000) B REAK- E VEN A NALYSIS 0 5,000 10,000 15,000 20,000 ($60,000) ($30,000) $0 $30,000 $60,000 $90,000 $120,000 $150,000 Break-Even Point Based On Acct. Profit = 0 Total Costs Sales Revenue Account- ing Profit Unit Sales ) 7 ( Gross Margin - Fixed Costs Enter =B21-B22 ) 7 ( Gross Margin - Fixed Costs Enter =B21-B22
Data Table: Sensitivity of Costs, Revenues, and Acct. Profit to Unit Sales Input Values for Unit Sales Output Formulas: 0 5,000 10,000 15,000 20,000 Total Costs $78,000 Sales Revenue $72,000 Accounting Profit ($6,000) ($30,000) ($20,000) ($10,000) $0 $10,000
and generates sales revenue of $6.00 per unit. What is the break-even point in unit sales, where accounting profit exactly equals zero, and what is the intuition for it? formula. Second, we use Excel's Solver to back solve for the break-even point using the income statement. Lastly, we will determine the sensitivity of costs, revenues, and accounting profits to unit sales. This will allow us to graphically illustrate the intuition of the break-even point. unit) Problem . A project has a fixed cost of $30,000, variable costs of $4.00 per unit, Solution Strategy . First, we solve for the break-even point in unit sales using the
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