1.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The break-even point in unit sales assuming N does not hire the outside supplier.
2.
a.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The amount of profit with N earn assuming it produces and sells 18,000 units.
2.
b.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The amount of profit with N.
3.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
To calculate: The break-even point in unit sales.
4.
a.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The total unit sales would N need to achieve in order to equal the profit earned in requirement 2a.
4.
b.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The total unit sales would N need to achieve in order to attain a target profit of $16,500 per month.
4.
c.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The amount of profit will N earn if it sells 35,000 units per month.
4.
d.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The amount of net profit.
5.
Concept introduction:
Break-even point: Break-even point is the level of production at which the cost of production equals to the revenue for a product. It is the point at which the total cost and total revenue are equal, that means there is no gain or loss for the business. It is calculated by dividing the fixed cost of production by the contribution per unit of production.
The amount of net profit.
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING
- Problem 1 The M/S Smooth flow Company manufactures a certain fountain pen. The fixed costs of the company are RO.300,000 per year. The unit selling price (net) is RO.8 and the unit variable cost is RO.5. At present the firm manufactures and sells 140,000 fountain pens. Determine: (i) Break Even Quantity (ii) Break Even Sales (iii) Margin of Safety In terms of units In terms of value (iv)Plot the Break Even Chartarrow_forwardChanges in Fixed and Variable Costs; Break-Even and Target Profit Analysis Neptune Company produces toys and other items for use in beach and resort areas. A small, inflatable toy has come onto the market that the company is anxious to produce and sell. The new toy will sell for $3 per unit. Enough capacity exists in the company’s plant to produce 16,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $1.25, and fixed expenses associated with the toy would total $35,000 per month. The company’s Marketing Department predicts that demand for the new toy will exceed the 16,000 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed expense of $1,000 per month. Variable expenses in the rented facility would total $1.40 per unit, due to somewhat less efficient operations than in the main plant. Required: 1. What is the monthly break-even point for the new toy in unit sales and dollar…arrow_forwardChapter 6 RUN LIKE THE WIND PROFIT GOAL Please solve and explain the following problem "Run Like The Wind sells ceiling fans. Target profit for the year is $470,000. If each fans contribution margin is $32 and fixed costs total $222,640, what is the number of fans that must be sold to meet the company's goal?"arrow_forward
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- PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to be a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin Less: Fixed costs P500,000 (300,000) 200,000 (125.000) 75,000 Income before taxes ( 30,000) P 45,000 Less: Income taxes Net income Requirements: On the basis of the preceding information, answer the following independent questions. 1. What is the break-even point in units? If the company determined that a particular advertising campaign had a high probability of increasing sales by 8,000 units, how much could it pay for such a campaign without reducing its planned profits? 3. If the company wants a P90,000 before-tax profit, how many units must it sell? 2arrow_forwardPlease solve this Question No. 3 CVP – Applied: Revising Sales IncentivesData concerning Wislocki Corporation's single product appear below: Per Unit Percent of SalesSelling price$ 180 100 %Variable expenses45 25 %Contribution margin$ 135 75 % Fixed expenses are $1,048,000 per month. The company is currently selling 9400 units per month.The marketing manager would like to introduce sales commissions as an incentive for the sales staff. Themarketing manager has proposed a commission of $12 per unit. In exchange, the sales staff would acceptan overall decrease in their salaries of $106,000 per month. The marketing manager predicts thatintroducing this sales incentive would increase monthly sales by 440 units. Required:What should be the overall effect on the company's monthly net operating income of this change?arrow_forwardPROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to be a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin P500,000 (300,000) 200,000 (125,000) 75,000 { 30.000) P 45,000 Less: Fixed costs Income before taxes Less: Income taxes Net income Requirements: On the basis of the preceding information, answer the following independent questions. 2 If the company determined that a particular advertising campaign had a high probability of increasing sales by 8,000 units, how much could it pay for such a campaign without reducing its planned profits?arrow_forward
- View Policies Current Attempt in Progress pport Werth Company produces tie racks. Its estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 racks at a price of $20 per unit. How many units will be sold at breakeven? D48,000. O 20,571. 3,600. O 14,400.arrow_forwardQUESTION 2 Luna Sea Sushi, Inc. has total costs of $120,000 when it sells 40,000 units. If total fixed costs are $40,000, what is variable cost per unit?arrow_forwardKnowledge Check 01 Walton Corporation is currently selling 104 units of its product. The company is deciding the price that it should charge for a bulk order of 40 units. The variable cost per unit is $200. This order will not involve any additional fixed costs and the company's current sales wll not be affected. The company targets a profit of $4,000 on the bulk order. What selling price per unit should the company quote for the bulk order? (Round your answer to the nearest whole dollar.) Selling Price Per Unitarrow_forward
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