APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms units. The break-even units tells us how many units must be sold so that operating income is $0. sales dollars or number of Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Gordon Products Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units %3D units
APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms units. The break-even units tells us how many units must be sold so that operating income is $0. sales dollars or number of Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Gordon Products Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units %3D units
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter13: Nonlinear Optimization Models
Section: Chapter Questions
Problem 4P: The profit function for two products is: Profit3x12+42x13x22+48x2+700, where x1 represents units of...
Related questions
Question
Transcribed Image Text:APPLY THE CONCEPTS: Break-Even Point in Units
The break-even point can be expressed in terms of sales dollars or number of
units. The break-even units tells us how many units must be sold so that
operating income is $0.
Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of
$4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the
contribution margin income statement shown below.
Gordon Products
Contribution Margin Income
Statement
Sales
Less: Variable costs
Contribution margin
Less: Fixed costs
Operating income
Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). $
Next, complete the formula below to determine the break-even units.
Total Fixed Costs / Contribution Margin per Unit = Units
units
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Recommended textbooks for you
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub