Part 1: You have been hired by Alison Chang, owner of a small start-up company, to create a data table that analyzes the break-even point for a new product she is developing. She would like you to analyze the break-even point for prices ranging from $12.99 to $17.99 per unit, in $0.50 increments. You can calculate the number of units she must sell to break even (break-even point) if you know the fixed expenses, the price per unit, and the expense (cost) per unit. The following formula determines the break-even point:Break-Even Point = Fixed Expenses / (Price per Unit - Expenses per Unit)Assume Fixed Expenses = $7,000; Price per Unit = $14.99 and Expenses per Unit = $8.00Use the concepts and techniques presented in Module 4 to determine the break-even point and then create the data table. Use the Price per Unit as the input cell and the break-even value as the result. Protect the worksheet so that only cells with data can be selected. Also calculate additional break-even points by using a two-way table and varying Fixed Expenses or Expense per Unit in addition to Price per Unit. Which of the following provides the owner with a wider range of break-even points: varying Fixed Expenses between $6500 and $7000 in increments of $250 or varying Expense per Unit between $7.60 and $8.00 in increments of $0.20?Part 2: What additional break-even points did you calculate, and why?

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Asked Jan 29, 2020
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Part 1: You have been hired by Alison Chang, owner of a small start-up company, to create a data table that analyzes the break-even point for a new product she is developing. She would like you to analyze the break-even point for prices ranging from $12.99 to $17.99 per unit, in $0.50 increments. You can calculate the number of units she must sell to break even (break-even point) if you know the fixed expenses, the price per unit, and the expense (cost) per unit. The following formula determines the break-even point:

Break-Even Point = Fixed Expenses / (Price per Unit - Expenses per Unit)

Assume Fixed Expenses = $7,000; Price per Unit = $14.99 and Expenses per Unit = $8.00

Use the concepts and techniques presented in Module 4 to determine the break-even point and then create the data table. Use the Price per Unit as the input cell and the break-even value as the result. Protect the worksheet so that only cells with data can be selected. Also calculate additional break-even points by using a two-way table and varying Fixed Expenses or Expense per Unit in addition to Price per Unit. Which of the following provides the owner with a wider range of break-even points: varying Fixed Expenses between $6500 and $7000 in increments of $250 or varying Expense per Unit between $7.60 and $8.00 in increments of $0.20?

Part 2: What additional break-even points did you calculate, and why?

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Expert Answer

Step 1

Breakeven  point is the point at which the fixed cost is just equal to the contribution generated from sale of goods. i.e. there is no profit or loss on sale of goods.

Step 2

The table for the change in breakeven points have been presented below

Accounting homework question answer, step 2, image 1
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Step 3

The formulas used for above computa...

Accounting homework question answer, step 3, image 1
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