Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
Question
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Chapter 21, Problem 19E
To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  Contribution Margin per unit = Sales price – Variable cost per unit

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  Breakeven point Units =  Total Fixed costsContribution margin per unit

  Breakeven point Dollar =  Total Fixed costsContribution margin ratio

Requirement-1:

The Contribution margin per unit

Expert Solution
Check Mark

Answer to Problem 19E

The Contribution margin per unit shall be $60

Explanation of Solution

The Contribution margin per unit is calculated as follows:

Contribution margin per unit = Sales Price − Variable Cost per unit

= 240-180 = 60

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  Contribution Margin per unit = Sales price – Variable cost per unit

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  Breakeven point Units =  Total Fixed costsContribution margin per unit

  Breakeven point Dollar =  Total Fixed costsContribution margin ratio

Requirement-2:

The Contribution margin Ratio

Expert Solution
Check Mark

Answer to Problem 19E

The Contribution margin Ratio shall be 25%

Explanation of Solution

The Contribution margin Ratio is calculated as follows:

Contribution margin Ratio = (Sales Price − Variable Cost per unit) / Sales Price

= (240-180) / 240 = 25%

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  Contribution Margin per unit = Sales price – Variable cost per unit

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  Breakeven point Units =  Total Fixed costsContribution margin per unit

  Breakeven point Dollar =  Total Fixed costsContribution margin ratio

Requirement-3:

Breakeven Point in units

Expert Solution
Check Mark

Answer to Problem 19E

Breakeven Point in units shall be 5,400 units

Explanation of Solution

The Breakeven Point in units is calculated as follows:

Breakeven Point = Total Fixed Cost / Contribution Margin per unit

= 324000 / 60

= 5400

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  Contribution Margin per unit = Sales price – Variable cost per unit

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  Breakeven point Units =  Total Fixed costsContribution margin per unit

  Breakeven point Dollar =  Total Fixed costsContribution margin ratio

Requirement-4:

Breakeven Point in Dollar

Expert Solution
Check Mark

Answer to Problem 19E

Breakeven Point in Dollar shall be $1,296,000

Explanation of Solution

The Breakeven Point in Dollars is calculated as follows:

Breakeven Point (Dollars) = Total Fixed Cost / Contribution Margin Ratio

= 324000 / 25%

= 1296000

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Chapter 21 Solutions

Connect Access Card For Fundamental Accounting Principles

Ch. 21 - Prob. 11DQCh. 21 - List three methods to measure cost behavior.Ch. 21 - Prob. 13DQCh. 21 - Prob. 14DQCh. 21 - Prob. 15DQCh. 21 - Prob. 16DQCh. 21 - Prob. 17DQCh. 21 - Prob. 18DQCh. 21 - Prob. 19DQCh. 21 - Prob. 20DQCh. 21 - Prob. 21DQCh. 21 - Prob. 22DQCh. 21 - Cost behavior identification C1 Listed here are...Ch. 21 - QS 21-2 Cost behavior identification c1 ...Ch. 21 - QS 21-3 Cost behavior estimation—high-low method...Ch. 21 - Prob. 4QSCh. 21 - Prob. 5QSCh. 21 - Prob. 6QSCh. 21 - Prob. 7QSCh. 21 - Prob. 8QSCh. 21 - Prob. 9QSCh. 21 - Prob. 10QSCh. 21 - Prob. 11QSCh. 21 - Prob. 12QSCh. 21 - Prob. 13QSCh. 21 - Prob. 14QSCh. 21 - Prob. 15QSCh. 21 - Prob. 16QSCh. 21 - Prob. 17QSCh. 21 - Prob. 18QSCh. 21 - Prob. 19QSCh. 21 - Prob. 20QSCh. 21 - Prob. 21QSCh. 21 - Prob. 1ECh. 21 - Prob. 2ECh. 21 - Prob. 3ECh. 21 - Prob. 4ECh. 21 - Prob. 5ECh. 21 - Prob. 6ECh. 21 - Prob. 7ECh. 21 - Prob. 8ECh. 21 - Prob. 9ECh. 21 - Prob. 10ECh. 21 - Prob. 11ECh. 21 - Prob. 12ECh. 21 - Prob. 13ECh. 21 - Prob. 14ECh. 21 - Prob. 15ECh. 21 - Prob. 16ECh. 21 - Prob. 17ECh. 21 - Prob. 18ECh. 21 - Prob. 19ECh. 21 - Prob. 20ECh. 21 - Prob. 21ECh. 21 - Prob. 22ECh. 21 - Prob. 23ECh. 21 - Prob. 24ECh. 21 - Prob. 25ECh. 21 - Prob. 26ECh. 21 - Prob. 27ECh. 21 - Prob. 1APSACh. 21 - Prob. 2APSACh. 21 - Prob. 3APSACh. 21 - Prob. 4APSACh. 21 - Prob. 5APSACh. 21 - Prob. 6APSACh. 21 - Prob. 7APSACh. 21 - Prob. 1BPSBCh. 21 - Prob. 2BPSBCh. 21 - Prob. 3BPSBCh. 21 - Prob. 4BPSBCh. 21 - Prob. 5BPSBCh. 21 - Prob. 6BPSBCh. 21 - Prob. 7BPSBCh. 21 - Prob. 21SPCh. 21 - Prob. 2AACh. 21 - Prob. 3AACh. 21 - Labor costs of an auto repair mechanic are seldom...Ch. 21 - Prob. 2BTNCh. 21 - Prob. 4BTNCh. 21 - Prob. 6BTN
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