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 Hip-Hop Co. that manufactures and markets several products.

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Answer 1

Question

Chapter 5, Problem 3PSB

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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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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Students have asked these similar questions

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.

Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 439.00 per unit Variable costs 199.00 per unit Fixed costs 687,000 per year Assume that the projected number of units sold for the year is 4,200. Consider requirements (b), (c), and (d) independently of each other. Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?

Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $200,000 based on a sales volume of 200,000 video disks. Disk City has been selling the disks for $16 each. The variable costs consist of the $10 unit purchase price of the disks and a handling cost of $2 per disk. Disk City's annual fixed costs are S600,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent. (Ignore income taxes.) Required: 1. Calculate Disk City's break-even point for the current year in number of video disks.

Answer 2

Question

Chapter 5, Problem 3PSB

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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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

See solution

Answer 3

Question

Chapter 5, Problem 3PSB

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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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

See solution

Answer 4

Question

Chapter 5, Problem 3PSB

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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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 3PSB

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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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 3PSB

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 Hip-Hop Co. that manufactures and markets several products.

Answer 7

Chapter 5, Problem 3PSB

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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 Hip-Hop Co. that manufactures and markets several 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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 keyboards using 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250, 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

Expert Solution & Answer

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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