Discuss the limitations of break-even analysis.
Q: Stinnett Transmissions, Incorporated, has the following estimates for its new gear assembly project:…
A: Given Unit sales = 90000 Unit price = $1220 Unit variable = $380 Fixed cost (million) = $3.75
Q: Product X sells P25 per unit and has related variable costs of P20 per unit. The fixed costs of…
A: Sales revenue to be earned for target profit can be calculated by seeing how much sales revenue to…
Q: A company is considering a project with a breakeven point of 18,000 units. The selling price is $22…
A: Formula:
Q: Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price =…
A: Variable cost refers to the cost that varies with the production. If production is high then the…
Q: Jarvis Company produces a product that has a selling price of $20.00 and a variable cost of $15.00…
A: Contribution margin per unit = sales price - variable cost = $20 - $15 = $5 per unit Contribution…
Q: Currently, the unit selling price of a product is $750, the unit variable cost is $600, and the…
A:
Q: Machine A has a fixed cost of P40,000 per year and a variable cost of P6 per unit. Machine B has an…
A: Since both machines break even at 2,000 units, total cost of both Machines will be equal at…
Q: A firm will produce either product A or B. The total costs (TC) for both products can be estimated…
A: Net profits: Net profits are the earnings received by the company at the closing of an accounting…
Q: The total fixed costs are $1,500,000 and the unit variable costs are $200,000. If the company…
A: The profit is difference between the revenue earned and fixed cost and variable cost of the product.…
Q: Recline Company is planning to produce and sell 11,250 units of its only product at a unit price of…
A: Break-even analysis is a technique used widely by production management. It helps to determine the…
Q: Chambers Company has just gathered estimates forconducting a breakeven analysis for a new…
A: Break-Even Point: It is the point of sales at which entity neither earns a profit nor suffers a…
Q: Sweet Manufacturing is planning to sell 400,000 hammers for $3 per unit. The contribution margin…
A: Contribution margin per unit = Sales x Contribution margin ratio = $3 per unit x 20% = $0.60 per…
Q: Johnston Company wants to double production of Product X from 1,000 units to 2,000 units. The…
A: Incremental net operating income is the change in the operating income due to change in the units…
Q: The MBF factory has a total cost of 45,000 units if it produces 500 products, and a total cost of…
A: Fixed costs are the costs that a company has to bear regardless of how much revenue it gathers.…
Q: In the upcoming year, NUBD estimates that it will produce and sell 4,000 units. The variable costs…
A: Analysis: As per Marginal costing, Margin of safety is the difference between Total sales Amount and…
Q: Sloan Corporation has the following estimates for its new gear assembly product: Price per unit =…
A: There are many factors which effect the profitability of the company. Every company estimates its…
Q: The manufacturer of a product that has a variable cost of $2.50 per unit and total fixed cost of…
A: The break-even point (BEP) appears to be an accounting term that refers to the point where a…
Q: Barnam Company currently produces and sells 6,000 units of a product that has a contribution margin…
A: Determine contribution margin per unit (After investment).
Q: The market price for a product has been $50 per unit, but competitive pressures have reduced…
A: Manufacturing costs: Manufacturing costs are the costs which are involved in converting the raw…
Q: Dennis Company sells a product for P20, variable costs are P8 per unit, and fixed costs are P32,000.…
A: Selling Price per unit= P 20 Variable Cost per unit = P 8 Contribution Margin per unit = Sales -…
Q: Suppose ABC Corp’s break-even point is revenues of $1,100,000. Fixed costs are $660,000. Calculate…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: how many units must Tony sell to breakeven?
A: Breakeven sales is the sales at which there is no profit or no loss. Breakeven point = Fixed cost/…
Q: Campbell Company, which produces and sells a small digital clock, bases its pricing strategy on a 20…
A: Differential analysis or incremental analysis is an accounting technique used by management. In…
Q: Swifty Corporation is planning to sell 810000 units for $1.50 per unit. The contribution margin…
A: Break-Even Sales: Sales volume required to cover the fixed and variable costs and left out with…
Q: How much can Tulip afford to spend on variable cost per unit if production and sales equal 46,000…
A: Variable cost is the total production cost that is affected by the change in the level of output.…
Q: The cost of producing a small transistor radio set consists of P22.00 for labor and P36.00 for…
A: A Break-even point is a point where a company's revenues and expenses were equal within a specific…
Q: A company's fixed operating costs are $740,000, its variable costs are $2.25 per unit, and the…
A: Paticulars Amount Sales price per unit 4.65 Less Variable Expenses per unit…
Q: If the fixed cost becomes $1,250,000, due to the increase in rent and salaries, what would be the…
A: The following computations are done for Jet X Company to calculate the revised BEP load factor.
Q: At present the selling price of the Sandals is £5.75 and it incurs the following variable costs:…
A: Break even point in units = Fixed costs / Contribution margin per unit
Q: A company has total fixed costs of 250,000 per annum. Its variable costs are 60% of sales and the…
A: Variable cost ratio = 60% So, Contribution margin ratio = 40% Contribution margin per unit = P8 x…
Q: A company that manufactures ceramic cups has a fixed costs amounting to P270,000 per month Variable…
A: The following information is provided as follows:- Fixed cost per month = P270,000 Variable cost =…
Q: How many total dollars of sales must BAC Company sell to break even if the selling price per unit is…
A: Contribution margin per unit = Selling price per unit - Variable cost per unit Contribution margin…
Q: What is the fixed cost per unit at the break-even point?
A: Information Provided: Production units = 8000 Selling price = 1.50P Fixed costs = 2800P Variable…
Q: Currently, the unit selling price of a product is $350, the unit variable cost is $290, and the…
A: Step 1: Compute the contribution margin per unit: Contribution margin per unit=Selling…
Q: The total cost of producing w phone sets per day at Cutting Edge Electronics plant is $( ½ w2 + 70w…
A: Optimum production is that level of production at which profit will be maximum, it is given by MR =…
Q: The total fixed costs per year for the company are $674,000. Required: a. What is the…
A: For calculating the break even sale with different products , we need use the following formula :-…
Q: Shapland Inc. has fixed operating costs of $500,000 and variable costs of $50per unit. If it sells…
A: Given information: Fixed operating costs amounted to $500,000 Variable cost per unit is $50 Selling…
Q: A company's fixed operating costs are $360,000, its variable costs are $2.95 per unit, and the…
A: Given: Fixed cost = $360,000 Selling Price per unit = $5.10 Variable Cost per unit = $2.95
Q: Currently, the unit selling price of a product is $200, the unit variable cost is $160, and the…
A: Break even point (BEP): Breakeven is the point where total expenses are equal to total revenue. at…
Q: Yorkville sells a haircutter at $65 and each unit has variable cost of $25. Yorkville's fixed…
A: Calculation of the Incremental net income:- Incremental net income = Incremental Revenue -…
Q: An electronics firm is currently manufacturing anitem that has a va riable cost of $.50 per unit and…
A: We first need to determine the profit in the two cases by considering the revenue and the total…
Q: Golden Corporation contemplates to market a new product. Estimated fixed costs is P1,000,000. The…
A: The contribution margin is calculated y deducting the variable cost from the net sales of the…
Q: How much is the break-even point in units?
A: Break Even Point in Units = Fixed Costs / Contribution Per Unit Fixed Costs = $164500 Contribution…
Q: Drape Corp. would like to market a new product at a selling price of P15 per unit. Fixed costs for…
A: Contribution margin per unit = P15 x 35% = P5.25
Q: Tony Company is contemplating of marketing a new product. Fixed costs will be P800,000 for…
A: Breakeven point is described as the point of level of production where the total expenses equal the…
Q: A bike manufacturing company has fixed costs of $130,000 per annum and the variable costs are 36% of…
A: Old contribution margin ratio = 100% - 36% Old contribution margin ratio = 64%
Q: Dishman Ltd plans to sell 200,000 items a year for £15 each. Fixed costs are £360,000 a year and…
A: Margin of Safety:- It is the difference in the intrinsic value and the market value of the stock. It…
Q: Kerrigan Ltd makes and sells product A. The current selling price is £11 and the total of variable…
A: Break even point means where there is no profit no loss. Variable cost means the cost which vary…
At present the selling price of the product is £5.75 and it incurs the following variable costs:
The fixed costs of production are £180,000 and the company currently sells 90,000 units.
Direct Labour £1.35
Direct Materials £1.75
Other Direct costs £0.40
Discuss the limitations of break-even analysis.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Their sales mix s reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $25,000 per year. What are total variable costs for Morris with their current product mix? Calculate the number of units of each product that will need to be sold in order for Morris to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.Abilene Industries manufactures and sells three products (XX, W, and ZZ). The sales price and unit variable cost for the three products are as follows: Their sales mix is reflected as a ratio of 4:2:1. Annual fixed costs shared by the three products are $345.000 per year. What are total variable costs for Abilene with their current product mix? Calculate the number of units of each product that will need to be sold in order for Abilene to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs per gas grill are 225, and the average price per gas grill is 600. Required: 1. How many gas grills must Gelbart Company sell to break even? 2. If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? 3. If Gelbart Companys variable costs increase to 240 per grill while the price and fixed costs remain unchanged, what is the new break-even point?
- Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are $15,250. Delta Co.s tax rate is 36% and the company wants to earn $44,000 after taxes. What would be Deltas desired pre-tax income? What would be break-even point in units to reach the income goal of $44,000 after taxes? What would be break-even point in sales dollars to reach the income goal of $44000 after taxes? Create a contribution margin income statement to show that the break-even point calculated in B, generates the desired after-tax income.
- If a company has fixed costs of $6.000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? A. 100 B. 180 C. 200 D. 2,000Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
- Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting sales of 100,000 units, Emerald Isle estimates the following expenses: An Irish firm that specializes in marketing will be engaged to sell the manufactured product and will receive a commission of 10% of the sales price. None of the U.S. home office expense will be allocated to the Irish facility. Required: 1. If the unit sales price is 2, how many units must be sold to break even? (Hint: First compute the variable cost per unit.) 2. Calculate the margin of safety ratio. 3. Calculate the contribution margin ratio.Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows: The current product mix is 4:3:2. The three models share total fixed costs of $430,000. Calculate the sales price per composite unit. What is the contribution margin per composite unit? Calculate Manatoahs break-even point in both dollars and units. Using an income statement format, prove that this is the break-even point.
