A company manufactures a single product. Budget and standard costs details for the next year include;selling price per unit; $24variable production cost per unit; $8.60fixed production cost; $650,000fixed selling and distribution costs; $230,400sales commission 5% of selling pricesales 90,000 unitsREQUIRED Calculate the break-even point in units Calculate the percentage by which the budgeted sales can fall before the company begins to make a loss. The Marketing Manager has suggested that the selling price per unit can be increased to $25 if the sales commission is increased to 8% of selling price and a further $10,000 is spent on advertising.calculate the revised break-even point based on the marketing manager's suggestion

1. Contribution per unit = $24.00 - $8.60 – $1.20 = $14.20 Break-even point = 88040014.20=62000…

Answered: Calculate the break-even point in units…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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A company manufactures a single product. Budget and standard costs details for the next year include;

selling price per unit; $24

variable production cost per unit; $8.60

fixed production cost; $650,000

fixed selling and distribution costs; $230,400

sales commission 5% of selling price

sales 90,000 units

REQUIRED

Calculate the break-even point in units
Calculate the percentage by which the budgeted sales can fall before the company begins to make a loss. The Marketing Manager has suggested that the selling price per unit can be increased to $25 if the sales commission is increased to 8% of selling price and a further $10,000 is spent on advertising.
calculate the revised break-even point based on the marketing manager's suggestion

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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