Q-3 MNP Ltd sold 2,75,000 units of its product at 375 per unit. Variable costs are 175 per unit (manufacturing costs of 140 and selling cost 35 per unit). Fixed costs are incurred uniformly throughout the year and amount to 3,50,00,000 (including depreciation of 1,50,00,000). there are no beginning or ending inventories. Required: (i) Compute breakeven sales level quantity and cash breakeven sales level quantity. (ii) Compute the P/V ratio. (iii) Compute the number of units that must be sold to earn an income (EBIT) of 25,00,000.

Q-3 MNP Ltd sold 2,75,000 units of its product at 375 per unit. Variable costs are 175 per unit (manufacturing costs of 140 and selling cost 35 per unit). Fixed costs are incurred uniformly throughout the year and amount to 3,50,00,000 (including depreciation of 1,50,00,000). there are no beginning or ending inventories. Required: (i) Compute breakeven sales level quantity and cash breakeven sales level quantity. (ii) Compute the P/V ratio. (iii) Compute the number of units that must be sold to earn an income (EBIT) of 25,00,000.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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Both Austin Company and Hill Company had the same unit sales, total costs, and income from operations for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. Explain the reason for this difference in break-even points.
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Break-even sales under present and proposed conditions Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unit during 20Y5. Its income statement for 20Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program that will permit an increase of $8,631,000 (35.000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000 but will not affect the relationship between sales and variable costs. Instructions Determine the maximum operating income possible with the expanded plant.
Appendix Absorption costing income statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept: Sales (420,000 units) 7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 14 per unit) 7,000,000 Less ending inventory (80,000 units x 14 per unit) 1,120,000 Variable cost of goods sold 5,880,000 Manufacturing margin 1,570,000 Variable selling and administrative expenses 80,000 Contribution margin 1,490,000 Fixed costs: Fixed manufacturing costs 160,000 Fixed selling and administrative expenses 75,000 235,000 Income from operations 1,255,000 a. Prepare an absorption costing income statement. b. Reconcile the variable costing income from operations of 1,255,000 with the absorption costing income from operations determined in (a).