1. Pakom Ltd has a choice of two machines to select one machine. The details of themachines are given as follows:MachineAutomatic10,000 units30,000Annual outputFixed Costs (sh)Profit at the above level ofProduction (sh)30,000unit.Market price of the product to be produced is shs. 10 perRequired:1. Break-even point for each machine.2. Level of sales at which profit is the same for the machines.3. Range of sales at which one is more profitable than the other.Semi-automatic10,000 units16,00024,000

The break-even point is the level of sales at which the total revenue equals the total costs, and…

Answered: 1. Break-even point for each machine.…

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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Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials $15 Direct labor 10 Factory overhead $451,600 Selling expenses: Sales salaries and commissions 93,800 Advertising 31,800 Travel 7,100 Miscellaneous selling expense 7,800 Administrative expenses: Office and officers' salaries 91,700 Supplies 11,300 Miscellaneous administrative expense 10,500 Total $705,600 $42 It is expected that 10,800 units will be sold at a price of $140 a unit. Maximum sales within…
Please explain this statement thoroughly. "To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin."
If an organization wants to make a profit, it must generate more sales revenue than the total costs it incurs. This relation can be expressed using which of the following profit equations? O a. Operating income = [(Sales price per unit - Variable cost per unit) x #units sold] - Fixed cost O b. Operating income = [Sales price per unit - Fixed cost per unit) x # units produced] -Variable cost Oc Operating income Sales revenue - Total variable costs - Discretionary costs O d. Operating income - Sales revenue - Committed costs - Fixed costs
Each of a company's two product lines has a different contribution margin ratio . If the company's total sales remain the same but the sales mix shifts toward selling more of the product with the higher contribution ratio , which of the following is true ? O a Fixed cost will be constant . . the breakeven point will decrease . Ocall of the answers are true . d the average contribution margin ratio will increase . O e operating income will increase
How do you calculate the break-even point in sales? Contribution margin fixed costs Fixed costs total sales Profit variable costs Fixed costs contribution margin % 0,000

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1. Break-even point for each machine. 2. Level of sales at which profit is the same for the machines. 3. Range of sales at which one is more profitable than the other.