# Break-Even Sales and Cost-Volume-Profit GraphLast year, Ridgecrest Inc. had sales of \$3,221,680, based on a unit selling price of \$440. The variable cost per unit was \$280, and fixed costs were \$836,800. The maximum sales within Ridgecrest Inc.'s relevant range are 13,000 units. Ridgecrest Inc. is considering a proposal to spend an additional \$168,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity. Using the cost-volume-profit graph prepared in part (1), determine (a) the operating income for last year and (b) the maximum operating income that could have been realized during the year.Operating income\$Maximum operating income\$

Question

Break-Even Sales and Cost-Volume-Profit Graph

Last year, Ridgecrest Inc. had sales of \$3,221,680, based on a unit selling price of \$440. The variable cost per unit was \$280, and fixed costs were \$836,800. The maximum sales within Ridgecrest Inc.'s relevant range are 13,000 units. Ridgecrest Inc. is considering a proposal to spend an additional \$168,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.

Using the cost-volume-profit graph prepared in part (1), determine (a) the operating income for last year and (b) the maximum operating income that could have been realized during the year.

 Operating income \$ Maximum operating income \$
Step 1

(a)

Calculation of operating income for the last year:

The results of the formulas used in the excel s...

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