BACKGROUND The company ABC, L. C. manufactures some products with an average sales price of € 25/unit, with fixed annual costs of € 110,000. The average unit variable costs are € 5. DEVELOP a) At what volume of production will the threshold of profitability be reached? b) Assuming that annual sales are estimated at 20,000 units, is distributed evenly over a year, on what date will the break-even point be reached? c) What would be the sales value or turnover corresponding to the threshold of profitability?

BACKGROUND The company ABC, L. C. manufactures some products with an average sales price of € 25/unit, with fixed annual costs of € 110,000. The average unit variable costs are € 5. DEVELOP a) At what volume of production will the threshold of profitability be reached? b) Assuming that annual sales are estimated at 20,000 units, is distributed evenly over a year, on what date will the break-even point be reached? c) What would be the sales value or turnover corresponding to the threshold of profitability?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 13E

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BACKGROUND The company ABC, L. C. manufactures some products with an average sales price of € 25/unit, with fixed annual costs of € 110,000. The average unit variable costs are € 5.

DEVELOP a) At what volume of production will the threshold of profitability be reached? b) Assuming that annual sales are estimated at 20,000 units, is distributed evenly over a year, on what date will the break-even point be reached? c) What would be the sales value or turnover corresponding to the threshold of profitability?