Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 20, Problem 3PB
1.
To determine
Compute the anticipated break-even sales (units).
2.
To determine
Compute the amount of sales (units) if the company desires a target profit of $300,000.
3.
To determine
Construct a cost-volume-profit chart assuming the sales of 40,000 units within the relevant range.
4.
To determine
Compute the probable income (loss) from operations if sales total 32,000 units.
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Profit-Volume Chart
For the coming year, Loudermilk Inc. anticipates fixed
costs of $600,000, a unit variable cost of $75, and a unit
selling price of $125. The maximum sales within the
relevant range are $2,500,000.
a. Determine the maximum possible operating loss.
b. Compute the maximum possible operating profit.
c. Construct a profit-volume chart on paper. Indicate
whether each of the following levels of sales is in the
operating profit area, operating loss area, or at the
break-even point.
4,800 units
8,000 units
12,000 units
16,000 units
20,000 units
d. Estimate the break-even sales (units) by using the
profit-volume chart constructed in part (c).
units
For the coming year, Cleves Company anticipates a unit selling price of $100, a unit variable cost of $60, and fixed costs of $480,000. Instructions
1. Compute the anticipated break even sales (units)
2. Compute the sales (units) required to realize a target profit of $240,000
3. Construct a cost volume profit chart, assuming maximum sales of 20,000 units within the relevant range
4. Determine the probable income (loss) from operations if sales total 16,000 units
For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000.
a. Construct a cost-volume-profit chart on a sheet of paper. Indicate whether each of the following levels of sales (units or dollars) is in the operating profit area, operating loss area, or at the break-even point.
4,800 units
Operating Loss Area
12,000 units
Operating Profit Area
$1,500,000
Operating Profit Area
20,000 units
Operating Profit Area
$2,500,000
Operating Profit Area
b. Estimate the break-even sales (dollars) by using the cost-volume-profit chart constructed in part (a).$1,500,000
c. The graphic format permits the user to visually determine the ? and the ? for any given level of ? .
Chapter 20 Solutions
Financial And Managerial Accounting
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