Alfarah Company estimates that variable costs will be 50% of selling price per unit, and fixed costs will total 500,000 The selling price of the product is $5. Instructions 1. Compute the break-even point in (a) units and (b) dollars. 2. Prepare a CVP graph, assuming maximum sales of $3,200,000, (Note: Use$400,000 increments for sales and costs and 100,000 increments for units.) 3. Assuming actual sales are $2million, compute the margin of safety in (a) dollars and (b)as ratio. Note, Variable costs: 50% of the selling price per unit Fixed costs: $500,000 Selling price per unit: $5 Maximum sales: $3,200,000 Actual sales: $2,000,000
Alfarah Company estimates that variable costs will be 50% of selling price per unit, and fixed costs will total 500,000 The selling price of the product is $5. Instructions 1. Compute the break-even point in (a) units and (b) dollars. 2. Prepare a CVP graph, assuming maximum sales of $3,200,000, (Note: Use$400,000 increments for sales and costs and 100,000 increments for units.) 3. Assuming actual sales are $2million, compute the margin of safety in (a) dollars and (b)as ratio. Note, Variable costs: 50% of the selling price per unit Fixed costs: $500,000 Selling price per unit: $5 Maximum sales: $3,200,000 Actual sales: $2,000,000
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 46E: Lotts Company produces and sells one product. The selling price is 10, and the unit variable cost is...
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![Alfarah Company estimates that variable costs will be 50% of selling price per
unit, and fixed costs will total 500,000 The selling price of the product is $5.
Instructions
1. Compute the break-even point in (a) units and (b) dollars.
2. Prepare a CVP graph, assuming maximum sales of $3,200,000,
(Note: Use$400,000 increments for sales and costs and 100,000 increments
for units.)
3. Assuming actual sales are $2million, compute the margin of safety in (a)
dollars and (b)as ratio.
Note,
Variable costs: 50% of the selling price per unit
Fixed costs: $500,000
Selling price per unit: $5
Maximum sales: $3,200,000
Actual sales: $2,000,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F266fc484-5c67-47d6-992b-66fccc5361b4%2Ffecd682f-b80e-487f-9131-5b6def710bd1%2Fkyec17_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Alfarah Company estimates that variable costs will be 50% of selling price per
unit, and fixed costs will total 500,000 The selling price of the product is $5.
Instructions
1. Compute the break-even point in (a) units and (b) dollars.
2. Prepare a CVP graph, assuming maximum sales of $3,200,000,
(Note: Use$400,000 increments for sales and costs and 100,000 increments
for units.)
3. Assuming actual sales are $2million, compute the margin of safety in (a)
dollars and (b)as ratio.
Note,
Variable costs: 50% of the selling price per unit
Fixed costs: $500,000
Selling price per unit: $5
Maximum sales: $3,200,000
Actual sales: $2,000,000
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