APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms units. The break-even units tells us how many units must be sold so that operating income is $0. sales dollars or number of Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Gordon Products Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units %3D units
APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms units. The break-even units tells us how many units must be sold so that operating income is $0. sales dollars or number of Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Gordon Products Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units %3D units
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 29BEB: Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in...
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