Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost. Requirement 1a: To compute: The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

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Answer 1

Question

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

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Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a maximum capacity of 700,000 yards of rope. Forecasted variable costs are $140 per 100 yards of XT rope. Required 1. Estimate Product XT’s break-even point in terms of (a) sales units and (b) sales dollars. 2. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point.

Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. The following names are to be used when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss If Flanders purchases the new machinery, what will be the company’s break-even point in units? . Use commas as needed (i.e. 1,234). If Flanders purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Assuming Flanders purchases the new machinery, construct a contribution margin income statement for sale of 216,000 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e.…

Required information [The following information applies to the questions displayed below.] Praveen Company manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding that has not been as profitable as planned. Because Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $310 selling price per unit. Its fixed costs for the year are expected to be $421,600. Variable costs for the year are expected to be $186 per unit. 2. Prepare a contribution margin income statement for Product XT at the break-even point. PRAVEEN COMPANY Contribution Margin Income Statement (at Break-Even) - Product XT Units $ per unit Total Less: Less: Sales Variable cost Contribution margin Fixed costs Income

Answer 2

Question

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

Answer 6

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

Answer 7

Chapter 5, Problem 3PSA

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1a:

To compute:

The break-even point in sales units for Praveen Co. that manufactures and markets a number of rope products.

Answer 8

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

Answer 9

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 1b:

To compute:

The break-even point in sales dollars for Praveen Co. that manufactures and markets a number of rope products.

Answer 10

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

Answer 11

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Cost-volume-profit chart: Cost-volume-profit chart is very useful in the planning phase of a business. It involves predicting the volume of sales activity, the costs to be incurred, revenues to be received, and profits to be earned. It is also useful in what-if analysis.

Requirement 2:

To prepare:

The CVP chart for Product XT using 7000 units as the maximum number of sales units on the horizontal axis of the graph and $1, 400, 000 as the maximum dollar amount on the vertical axis.

Answer 12

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

Answer 13

To determine

Concept introduction:

Break-Even Point: The level of sales at which profits are zero refers to break-even point. In other words, it is the point where total revenue equals total cost and total contribution margin equals total fixed cost.

Requirement 3:

To prepare:

The contribution margin income statement showing sales, variable costs and fixed costs for Product XT as the break-even point.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 5 - Prob. 1MCQ Ch. 5 - Prob. 2MCQ Ch. 5 - Prob. 3MCQ Ch. 5 - Prob. 4MCQ Ch. 5 - Prob. 5MCQ Ch. 5 - Prob. 1DQ Ch. 5 - Prob. 2DQ Ch. 5 - When output volume increases, do fixed costs per...Ch. 5 - How is the cost-volume-profit analysis useful?Ch. 5 - Prob. 5DQ

Solution Summary: The author explains the concept of break-even point, where total revenue equals total cost, and contribution margin is equal to total fixed cost.

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