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Break-even sales and sales to realize operating income For the current year ended March 31, Cosgrove Company expects fixed costs of $595,000, a unit variable cost of $50, and a unit selling price of $75. a.  Compute the anticipated break-even sales (units). fill in the blank 1 units b.  Compute the sales (units) required to realize operating income of $137,500. fill in the blank 2 units

Break-even sales and sales to realize operating income For the current year ended March 31, Cosgrove Company expects fixed costs of $595,000, a unit variable cost of $50, and a unit selling price of $75. a.  Compute the anticipated break-even sales (units). fill in the blank 1 units b.  Compute the sales (units) required to realize operating income of $137,500. fill in the blank 2 units

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Break-even sales and sales to realize operating income

For the current year ended March 31, Cosgrove Company expects fixed costs of $595,000, a unit variable cost of $50, and a unit selling price of $75.

a.  Compute the anticipated break-even sales (units).
fill in the blank 1 units

b.  Compute the sales (units) required to realize operating income of $137,500.
fill in the blank 2 units

Expert Solution
Step 1

The variable cost per unit must be deducted from the selling price per unit in order to calculate the contribution margin per unit.

Contribution margin per unit = Selling price per unit - Variable cost per unit=$75-$50=$25 per unit

 

 

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