module 6 hw

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Baker College *

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3110

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Accounting

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Feb 20, 2024

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docx

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Brian Nieves Baker College BUS3110-C1 Module 6: Homework Problem 11-28 pg. 435 Determine the break-even point in units and dollars using each of the following approaches: Check figure a. 10,000 units a. Use the equation method. N = # of units Profit = $0 Break-even in units: Sales – Var. Cost – Fixed Cost = Profit (net income) ($150 * N)- (($60 + $18) * N) – ($480,000 + $240,000) = 0 $72N - $720,000 = 0 $72N = $720,000 N = 10,000 Break-even in $: ¿ costs ( sales var .costs ) ÷sales $ 720,000 ( $ 150 $ 78 ) ÷ $ 150 B/E $= $1,500,000 b. Use the contribution margin per unit approach. Break-even in units: ¿ costs contributionmargin perunit ( sales var .costs ) $ 720,000 $ 150 −( $ 60 + $ 18 ) $ 720,000 $ 72 B/E = 10,000
Break-even in $: ¿ costs var .costs / sales $ 720,000 ( $ 72 $ 150 ) B/E= $1,500,000 c . Confirm your results by preparing a contribution margin income sheet for break-even sales volume. See attached excel worksheet. Problem 11-29 pg. 436 For a, b, and c see attached excel worksheet. d. Assuming management is pessimistic and risk adverse, the product with the lowest operating leverage should be added to the cosmetics line. The Color gel line has the lowest percentage change in net income. This product line has the least decrease in net income for any given decease in sales making it the least risky option. e. Assuming management is optimistic and aggressive, the product with the highest operating leverage should be chosen. The Bath Oil line has the highest percentage change in net income for the given increase in sales.
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