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Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,800,000 pages at a price of $0.08 each in the coming year. Product costs include: There is no variable selling expense; fixed selling and administrative expenses total $46,000. Required: 1. Calculate the break-even point in units. 2. Calculate the break-even point in sales revenue. 3. Calculate the margin of safety in units for the coming year. 4. Calculate the margin of safety in sales revenue for the coming year. 5. What if the total selling and administrative expenses are reduced to $38,800? Recalculate: a. Break-even point in units b. Break-even point in sales revenue c. Margin of safety in units for the coming year d. Margin of safety in sales revenue for the coming year

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 16, Problem 6CE
Textbook Problem
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Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,800,000 pages at a price of $0.08 each in the coming year. Product costs include:

Chapter 16, Problem 6CE, Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy

There is no variable selling expense; fixed selling and administrative expenses total $46,000.

Required:

  1. 1. Calculate the break-even point in units.
  2. 2. Calculate the break-even point in sales revenue.
  3. 3. Calculate the margin of safety in units for the coming year.
  4. 4. Calculate the margin of safety in sales revenue for the coming year.
  5. 5. What if the total selling and administrative expenses are reduced to $38,800? Recalculate:
    1. a. Break-even point in units
    2. b. Break-even point in sales revenue
    3. c. Margin of safety in units for the coming year
    4. d. Margin of safety in sales revenue for the coming year

1.

To determine

Compute the break-even point in units.

Explanation of Solution

Break-Even Point: The break-even point refers to the point of sales at which the firm neither earns a profit nor suffers a loss. It is also known as the point of sales or sales value at which the firm recovers the entire cost of fixed and variable nature.

Compute the break-even units:

Break-even in Units =Fixed costPrice Variable Cost=$80,000<

2.

To determine

Compute the break-even revenue.

3.

To determine

Compute the margin of safety in units.

4.

To determine

Compute the margin of safety in sales revenue.

5. a.

To determine

Compute the break-even point in units, if the selling and administrative expenses are reduced to $38,800.

5. b.

To determine

Compute the break-even revenue, if the selling and administrative expenses are reduced to $38,800.

5. c.

To determine

Compute the margin of safety in units, if the selling and administrative expenses are reduced to $38,800.

5. d.

To determine

Compute the margin of safety in sales revenue, if the selling and administrative expenses are reduced to $38,800.

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Chapter 16 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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