A company offers three products, A,B,C The current budget for the upcoming accounting period is presented below, by product: A B C # of units 18 12 30 Selling price per unit ($) 75 50 60 Variable cost per unit ($) 25 20 15 Fixed costs (total $) 500 360 900 There is a different customer market for each of these products. Fixed costs reflect product-specific machinery. Required 1. Identify which of the two methods to compute the break-even point best suits this scenario. 2. Describe why the method you identified in (1) best suits this scenario. 3. Compute the break-even point in units using this method.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A company offers three products, A,B,C
The current budget for the upcoming accounting period is presented below, by product:
A B C
# of units 18 12 30
Selling price per unit ($) 75 50 60
Variable cost per unit ($) 25 20 15
Fixed costs (total $) 500 360 900
There is a different customer market for each of these products.
Fixed costs reflect product-specific machinery.
Required
1. Identify which of the two methods to compute the break-even point best suits this scenario.
2. Describe why the method you identified in (1) best suits this scenario.
3. Compute the break-even point in units using this method.
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