Required information30sDollars$1800,000$160,000$140,000$120,000$100,000$80,000$60,000$40,000$20,000$00Maximum productive capacity = 1,800 unitsBreak-Even Point (salesof 800 units or $80,000)Loss Area2004000:00 / 1:56Total SalesTotal CostsProfit Area600 800 1,000 1,200 1,400 1,600 1,800Volume (units produced and soldKnowledge Check 01Based on a CVP graph, select the correct drop-down answer for each question.CCBLine that starts at zero on the vertical axis with a slope based on the selling price per unit.Line that starts at the fixed cost level on the vertical axis and increases based on the slope of the variable cost per unit. Required informationLearning Objective 05-P2: Compute the break-even point for a single-product company.A company's break-even point for a period is the sales volume at which total revenues equal total costs. To compute abreak-even point in terms of sales units, we divide total fixed costs by the contribution margin per unit. To compute abreak-even point in terms of sales dollars, divide total fixed costs by the contribution margin ratio.Cost-Volume-Profit ChartDollarsMaximum productive capacity = 1,800 units Sales = $180,000$1800,000$160,000$140,000$120,000$100,000Largest Income = $30,000$80,000Maximum productive capacity = 1,800 unitsBreak-Even Point (salesof 800 units or $80,000)Total SalesTotal Costs

The chart is graphical representation of breakeven point chart or cost volume profit graph. Based on…

Answered: Required information Dollars $1800,000…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 16MC: Break-even for a multiple product firm. can be calculated by dividing total fixed costs by the...

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The manager of a company are planning to manufacture more product than is needed for expected sales for the coming year. What effect will this have on operating income under(a) the absorption costing concept and (b) the variable costing concept?
Break-even for a multiple product firm. can be calculated by dividing total fixed costs by the contribution margin of a composite unit can be calculated by multiplying fixed costs by the contribution margin ratio of a composite unit can only be calculated when the proportion of products sold is the same for all products can be calculated by multiplying fixed costs by the contribution margin ratio of the most common product in the sales mix
The amount of a units sales price that helps to cover fixed expenses is its ____________________. A. contribution margin B. profit C. variable cost D. stepped cost
The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sales and total variable cost. e. difference between variable cost and fixed cost.
The profit function for two products is: Profit3x12+42x13x22+48x2+700, where x1 represents units of production of product 1, and x2 represents units of production of product 2. Producing one unit of product 1 requires 4 labor-hours, and producing one unit of product 2 requires 6 labor-hours. Currently, 24 labor-hours are available. The cost of labor-hours is already factored into the profit function, but it is possible to schedule overtime at a premium of 5 per hour. a. Formulate an optimization problem that can be used to find the optimal production quantity of products 1 and 2 and the optimal number of overtime hours to schedule. b. Solve the optimization model you formulated in part (a). How much should be produced and how many overtime hours should be scheduled?
Contribution margin by segment The following information is for LaPlanche Industries Inc.: Determine the contribution margin for (A) Product YY and (B) West Region.
A CVP graph such as the one shown below is a useful technique for showing relationships among an organization's costs, volume, and profits. 8. Required: Identify the numbered components in the CVP graph. Answer Number 1 Number 2 Number 3 Number 4 Number 5 Number 6 Number 7 Number 8 Number 9 State the effect of each of the following actions on the break-even point. Answer |The unit selling price is increased from $ 18 to $20. |Unit variable expenses are decreased from $12 to $10. |Fixed expenses are increased by $3,000 per period Two thousand more units are sold during the period than were budgeted Due to paying salespersons a commission rather than a flat salary, fixed expenses are reduced by $8,000 per period and unit variable expenses are increased by $3 Due to an increase in the cost of materials, both unit variable expenses and the selling price are increased by $2. Advertising costs are increased by $10,000 per period, resulting in a 10% increase in the number of units sold. Due…
Problem 3-17A (Algo) Determining the break-even point and preparing a contribution margin income statement LO 3-1 Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $76 per unit. Variable selling expenses are $14 per unit, annual fixed manufacturing costs are $352.000, and fixed selling and administrative costs are $266,000 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. d. Prepare a contribution margin income statement for the break-even sales volume.
1. To compute the breakeven point using the contribution margin, we get the ratio of a. Total fixed expenses and Total contribution margin b. Total variable expenses and Total Contribution margin c. Total fixed expenses and Contribution margin per unit d. Total variable expenses and Contribution margin per unit 2. A mathematical expression that describes a breakeven point of a company is a. Sales Revenue = Variable expenses + Fixed expenses b. Sales Revenue = Variable expenses - Fixed expenses c. Sales Revenue < Variable expenses + Fixed expenses d. Sales Revenue > Variable expenses - Fixed expenses 3. The Cost-Volume-Profit equation is given by a. Sales Revenue = Profits + Contribution margin ratio + Fixed expenses b. Sales Revenue = Profits + Contribution margin + Fixed expenses c. Sales Revenue = Profits+ Variable expenses + Fixed expenses d. Sales Revenue = Profits -Variable expenses…
APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30 Variable Cost per Unit $15 Total Fixed Cost $15,000 For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company's product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a per-unit basis.…
What is a cost whose total amount changes in direct proportion to a change in volume? mixed cost fixed cost irrelevant cost variable cost 2. Which of the following costs is an example of a fixed cost? delivery costs salary of plant manager direct materials sales commissions 3. If production increases by 15%, how will total variable costs likely react? remain the same decrease by 15% increase by 7.5% increase by 15% 4. Which of the following statements is TRUE with respect to fixed costs per unit? They will increase as production decreases They will decrease as production decreases They will remain the same as production levels change They will increase as production increases 5. Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is $10, unit variable costs are $7, and total fixed costs are $3,300. What are breakeven sales? $11,000 $4,714 $3,300 $7,700 6. Fixed Company produces a single product selling for $30 per unit. Variable costs…
1.What is a cost whose total amount changes in direct proportion to a change in volume? mixed cost fixed cost irrelevant cost variable cost 2. Which of the following costs is an example of a fixed cost? delivery costs salary of plant manager direct materials sales commissions 3. If production increases by 15%, how will total variable costs likely react? remain the same decrease by 15% increase by 7.5% increase by 15% 4. Which of the following statements is TRUE with respect to fixed costs per unit? They will increase as production decreases They will decrease as production decreases They will remain the same as production levels change They will increase as production increases 5. Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is $10, unit variable costs are $7, and total fixed costs are $3,300. What are breakeven sales? $11,000 $4,714 $3,300 $7,700 6. Fixed Company produces a single product selling for $30 per unit. Variable costs…

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