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During the upcoming year De Anza Co. expects the following data: Expected unit selling price is: Expected unit variable cost is: Expected total fixed costs are: $1,512,500 Required 1. Calculate breakeven point in both units and dollars. (Show work in blank space below.) $125 $70 Round units to the nearest unit and round dollars to the nearest dollar. 2. Compute sales units required to realize income from operations of $630,000. 3. Construct a cost-volume-profit chart assuming maximum sales in the relevant range of 40,000 units. ( Use the available graph template below.) Label the following parts of the graph: Sales Revenue, Fixed Costs, Variable Costs, Total Costs, Profit Area, Loss Area, and Break Even Point.

During the upcoming year De Anza Co. expects the following data: Expected unit selling price is: Expected unit variable cost is: Expected total fixed costs are: $1,512,500 Required 1. Calculate breakeven point in both units and dollars. (Show work in blank space below.) $125 $70 Round units to the nearest unit and round dollars to the nearest dollar. 2. Compute sales units required to realize income from operations of $630,000. 3. Construct a cost-volume-profit chart assuming maximum sales in the relevant range of 40,000 units. ( Use the available graph template below.) Label the following parts of the graph: Sales Revenue, Fixed Costs, Variable Costs, Total Costs, Profit Area, Loss Area, and Break Even Point.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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### Educational Content: Break-Even Analysis and Cost-Volume-Profit Chart **De Anza Co. Upcoming Year Expectations:** - **Expected unit selling price:** $125 - **Expected unit variable cost:** $70 - **Expected total fixed costs:** $1,512,500 **Requirements:** 1. **Calculate Break-Even Point:** - Calculate in both units and dollars. - Round units to the nearest unit. - Round dollars to the nearest dollar. 2. **Compute Sales Units for Target Income:** - Determine the number of sales units required to achieve an operational income of $630,000. 3. **Construct a Cost-Volume-Profit Chart:** - Assume maximum sales in the range of 40,000 units. - Use the provided graph template. - Label the chart with the following components: - Sales Revenue - Fixed Costs - Variable Costs - Total Costs - Profit Area - Loss Area - Break-Even Point **Graph Explanation:** The graph template provided has a grid layout that can be used to plot the cost-volume-profit analysis. Here's how to interpret the graph: - **X-axis (Horizontal):** Represents the number of units, ranging from 0 to 40,000 units, in increments of 5,000. - **Y-axis (Vertical):** Needs labeling based on appropriate cost amounts (e.g., dollars). - **Plotting Instructions:** - **Sales Revenue Line:** Plot a line representing total sales revenue at different sales volumes. - **Fixed Costs Line:** Draw a horizontal line displaying fixed costs, which remain constant regardless of units sold. - **Total Costs Line:** This line should start at the point where fixed costs intersect the Y-axis and increase with variable costs. - **Break-Even Point:** The point where the Sales Revenue Line intersects the Total Costs Line indicates the break-even point. - **Profit Area:** The region above the Total Costs Line after the break-even point. - **Loss Area:** The region below the Total Costs Line before reaching the break-even point. Use the graph to visually analyze the profit and loss areas relative to sales volume, and to identify the break-even point. This exercise helps in understanding the financial dynamics related to selling products.
Transcribed Image Text:### Educational Content: Break-Even Analysis and Cost-Volume-Profit Chart **De Anza Co. Upcoming Year Expectations:** - **Expected unit selling price:** $125 - **Expected unit variable cost:** $70 - **Expected total fixed costs:** $1,512,500 **Requirements:** 1. **Calculate Break-Even Point:** - Calculate in both units and dollars. - Round units to the nearest unit. - Round dollars to the nearest dollar. 2. **Compute Sales Units for Target Income:** - Determine the number of sales units required to achieve an operational income of $630,000. 3. **Construct a Cost-Volume-Profit Chart:** - Assume maximum sales in the range of 40,000 units. - Use the provided graph template. - Label the chart with the following components: - Sales Revenue - Fixed Costs - Variable Costs - Total Costs - Profit Area - Loss Area - Break-Even Point **Graph Explanation:** The graph template provided has a grid layout that can be used to plot the cost-volume-profit analysis. Here's how to interpret the graph: - **X-axis (Horizontal):** Represents the number of units, ranging from 0 to 40,000 units, in increments of 5,000. - **Y-axis (Vertical):** Needs labeling based on appropriate cost amounts (e.g., dollars). - **Plotting Instructions:** - **Sales Revenue Line:** Plot a line representing total sales revenue at different sales volumes. - **Fixed Costs Line:** Draw a horizontal line displaying fixed costs, which remain constant regardless of units sold. - **Total Costs Line:** This line should start at the point where fixed costs intersect the Y-axis and increase with variable costs. - **Break-Even Point:** The point where the Sales Revenue Line intersects the Total Costs Line indicates the break-even point. - **Profit Area:** The region above the Total Costs Line after the break-even point. - **Loss Area:** The region below the Total Costs Line before reaching the break-even point. Use the graph to visually analyze the profit and loss areas relative to sales volume, and to identify the break-even point. This exercise helps in understanding the financial dynamics related to selling products.
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