3.4 Break Even Point AnalysisMultiple choice. Indicate on the ANSWER SHEET the letter and the amount of the correct answer.Given: Based on 100,000 units of production, variable cost rate is P2 per unit and fixed cost is P20,000.Q34 How much must be the variable cost rate at 80,000 and 125,000 units of production?a) P2.50 and P1.60, respectively c)P2.00 for bothe) P3.00 and P2.50b) P2.75 and P1.76, respectivelyd) P2.00 and P1.60 respectively d) None of the aboveQ35. How much must be the fixed cost rate per unit at 80,000 and 125,000 units of production?a) P.25 & P.16, respectively c) P.16 & P.20, respectivelyb) P.20 for bothd) P25 & P 30 respectivelye). P 60 and P30 respectivelyf) None of the aboveQ36. What do the areas/lines (a-e-b), (b-f-c), (f-e-g) and (c) refer to in Graph 1?(a-e-b)(a) Loss area(b) Profit area3.6(b-f-c)Variable costVariable costFixed costa) P30b) P20(c) Loss area(d) None of the aboveQ37. To what may the areas (m-o-n), (n-o-x) and (t-p-o-x) refer in graph 2?(m-o-n)(a) Total cost(b) Variable cost(c) Contribution margin(d) None of the above(f-e-g)Profit areaLoss areaProfit area(n-o-x)Variable costTotal costVariable costGraph 13.5 Q38. How much must be the variable cost per unit based on the following data?Breakeven pointUnit selling priceFixed cost.700 unitsP 55P21,000c) P25Graph 2d) P22.50(fc)Fixed costFixed costVariable cost(t-p-o-x)Contribution marginContribution marginTotal coste) P27.50Q39. How much are the total fixed cost and the variable cost per unit?a) P30,000 and P40, respectively.b) P150,000 and P40, respectivelyd) None of the aboveBreakeven point sales figure is P150,000 and contribution margin percentage is 20% based onunit selling price of P50.c) P120,000 and P20, respectivelyd) None of the aboveQ40. How much must be the margin of safety and net income based on sales of P200,000?a) P50,000 and P40,000, respectively. c) P160,000 and P40,000, respectively.b) P50,000 and P10,000, respectively. d) None of the aboveQ41. A plant expansion is expected to increase fixed costs by P35,000. How much should be thebreakeven point peso sales after the plant expansion?a) P185,000b)P175,000c) P325,000d) Answer not givenQ42. If the unit selling price were to be raised to P60, how much should be the breakeven point sales?a) P140,000c) P100,000d) None of the aboveb)P90,000

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Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter21: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.17EX

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(Please answer question 2) Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 2. Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V 3. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if…
Q3. If the unit selling price is $16, the unit variable cost is $12, and fixed costs are $160,000, what are the break-even sales in units?? Answer: 40,000 units Explain your answer: Contribution margin per unit = Sales price - Variable costs = $16 - $12 = $4 per unit Break-even sales in units = Fixed costs /Contribution margin per unit = $160,000/$4 per unit = 40,000 units Break-even is the point where there is no loss and no profit is possible at break-even point, total expenses are equal to total revenue. Q4. Based on the data presented in question 3, how many units of sales would be required to realize operating income of $29,000? Answer: ______________ units Explain your answer: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Question 2 Calculate Break-Even Point sales, when total sales, total variable costs and fixed costs are 300,000, 200,000 and 50,000 respectively.
If this is the Overall break even point = Fixed cost / Contribution margin ratio = $16,650,000 / 64.74% = $25,718,257 approx And if the sales commission increases to 15%, the variable costs will increase thereby the contribution margin will decrease. This will also decrease the contribution margin ratio. When the contribution margin ratio decreases, the break-even point will increase, and when the break-even point increases the margin of safety will decrease. What happens: If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. What will Mirabel’s new break-even point be? If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. What is the break-even and margin of safety under these circumstances? If the projection is that sales will…
Management believes it can sell a new product for $6.50. The fixed costs of production are estimated to be $5,500, and the variable costs are $2.50 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Round your answers to the nearest dollar. Enter zero if necessary. Use a minus sign to enter losses, if any. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Losses) 0 $ $ $ $ $ 500 $ $ $ $ $ 1,000 $ $ $ $ $ 1,500 $ $ $ $ $ 2,000 $ $ $ $ $ 2,500 $ $ $ $ $ 3,000 $ $ $ $ $ Determine the break-even level using the above table and use the Exhibit 19.5 to confirm the break-even level of output. Round your answers for the break-even level to the nearest whole number. Round your answers for the fixed costs, variable costs, total costs,…
8. Assume that Current Sales are $100,000; and Break even in sales dollars is $75,000. What is the Margin of Safety ratio? a. 25% b. 50% c. 75% d. 100% 9. Assume Fixed costs are $10,000; Selling price is $30 and variable costs are $10. What is the break even in units? Give answer to the nearest unit. Group of answer choices a. 500 units b. 1,000 units c. 250 units d 334 units 10. If Direct Labor is 1 hour per unit at a rate of $25 per hour, what would be the budgeted amount for Direct Labor costs for the year if we expect to use 500 hours in the first six months and 600 hours in the second six months? a. $55,000 b. $27,500 c. $2,200 f $25,000 11. If Variable MOH is $2 per direct labor hour and the fixed MOH (all cash) is $2,500 per month, what is the amount of MOH budgeted for the month if 1,000 Direct Labor hours are budgeted? a. $2,500 b. $2,000 c. $4,500 d. $5,000 12. Assume Fixed costs are $10,000; Selling price is $30 and…
The selling price of a particular product is $37.00 per unit, fixed costs total $225,600, and the breakeven sales in dollars is $940,000, what will the variable expense per unit be? Question 4 options: $117.17 $28.12 $8.88 $45.88
If the sales price is $60 per unit, the variable cost is $10 per unit, total fixed costs is $60,000, and 12,000 units are produced, the breakeven in units is: Question 7 options: 1,200. 1,000. 240. 200.
5. Herman Corp. has two products, A and B, with the following total sales and total variable costs: Product A Product B P10,000 P30,000 Total Sales P 4,000 P24,000 Total Variable Costs What is the overall contribution margin ratio? 30% 50% 40% 70%
Exercise 4: From the following particulars, calculate Margin of safety: Fixed cost OMR. 100,000 Variable cost OMR. 150,000 Total Sales OMR. 300,000 Exercise 5: Break-even point = OMR. 30,000 Profit = OMR. 1,500 Fixed cost = OMR. 6,000 What is the amount of variable cost? Exercise 6: Sales = 4,000 units @ OMR. 10 per unit Break-even point = 1,500 units Fixed cost = OMR. 3,000 What is the amount of (a) variable cost; and (b) profit? Exercise 7: Fixed cost OMR. 8,000 Profit earned OMR. 2,000 Break-even sales OMR. 40,000 What are actual sales? Exercise 8: The following formation is given: Sales = OMR. 200,000; Variable cost = OMR. 120,000; Fixed cost = OMR. 30,000. Calculate (a) Break-even point (b) New break-even point if sales are reduced by 10% (c) New break-even point if variable' cost increases by 10% (d) New break-even point if fixed cost increases by 10%
Company XYZ has total fixed costs of $5,000. Assume a selling price per unit of $8 and total variable cost per unit of $4, what is the breakeven point in ($) value? Select one: O a. 40,000 O b. None of the given answers O c. 1,250 O d. 10,000 O e. 20,000
10. Once the break-even point has been reached, operating income will increase by the: Multiple Choice a)Unit contribution margin for each additional unit sold b) Average fixed cost for each additional unit sold c) Variable cost per unit for each additional unit sold d)Margin of safety amount e)Change in sales dollars

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