APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms units. The break-even units tells us how many units must be sold so that operating income is $0. sales dollars or number of Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Gordon Products Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units %3D units
APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms units. The break-even units tells us how many units must be sold so that operating income is $0. sales dollars or number of Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Gordon Products Contribution Margin Income Statement Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units %3D units
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:APPLY THE CONCEPTS: Break-Even Point in Units
The break-even point can be expressed in terms of sales dollars or number of
units. The break-even units tells us how many units must be sold so that
operating income is $0.
Assume that you are part of the accounting team for Gordon Products. The company currently expects to sell 689 units for total revenue of $20,150 each month. Gordon Products estimates direct materials costs of $3,150, direct labor costs of
$4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the
contribution margin income statement shown below.
Gordon Products
Contribution Margin Income
Statement
Sales
Less: Variable costs
Contribution margin
Less: Fixed costs
Operating income
Gordon Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). $
Next, complete the formula below to determine the break-even units.
Total Fixed Costs / Contribution Margin per Unit = Units
units
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education