Alfarah Company estimates that variable costs will be 50% of selling price perunit, and fixed costs will total 500,000 The selling price of the product is $5.Instructions1. Compute the break-even point in (a) units and (b) dollars.2. Prepare a CVP graph, assuming maximum sales of $3,200,000,(Note: Use$400,000 increments for sales and costs and 100,000 incrementsfor units.)3. Assuming actual sales are $2million, compute the margin of safety in (a)dollars and (b)as ratio.Note,Variable costs: 50% of the selling price perFixed costs: $500,000Selling price per unit: $5Maximum sales: $3,200,000Actual sales: $2,000,000unit

Variable Cost = 50% of selling priceFixed Cost = 500,000Selling price = $5

Alfarah Company estimates that variable costs will be 50% of selling price per unit, and fixed costs will total 500,000 The selling price of the product is $5. Instructions 1. Compute the break-even point in (a) units and (b) dollars. 2 Pronoro a CVP anonk of $2 200.000

Alfarah Company estimates that variable costs will be 50% of selling price per unit, and fixed costs will total 500,000 The selling price of the product is $5. Instructions 1. Compute the break-even point in (a) units and (b) dollars. 2 Pronoro a CVP anonk of $2 200.000

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Alfarah Company estimates that variable costs will be 50% of selling price per
unit, and fixed costs will total 500,000 The selling price of the product is $5.
Instructions
1. Compute the break-even point in (a) units and (b) dollars.
2. Prepare a CVP graph, assuming maximum sales of $3,200,000,
(Note: Use$400,000 increments for sales and costs and 100,000 increments
for units.)
3. Assuming actual sales are $2million, compute the margin of safety in (a)
dollars and (b)as ratio.
Note,
Variable costs: 50% of the selling price per
Fixed costs: $500,000
Selling price per unit: $5
Maximum sales: $3,200,000
Actual sales: $2,000,000
unit

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