BREAK-EVEN POINTJust Loft Inc. (JL), builds a loft that is easily adaptable to most dorm rooms or apartments and canbe assembled into a variety of configurations. Each loft is sold for $500, and the cost to produce oneloft is $300, including all parts and labor. JL has fixed costs of $100,000.a) What happens if JL produces nothing?b) Now, assume JL produces and sells one unit (loft). What are their financial results?c) Now, what do you think would happen if they produced and sold 501 units?d) How many units would JL need to sell in order to break even?e) How many units would JL need to sell if they wanted to have a pre-tax profit of $50,000?

Break even point is the level of activity at which contribution is just sufficient to cover the…

Answered: BREAK-EVEN POINT Just Loft Inc. (JL),…

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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Kent Co. manufactures a product that sells for $57.00 and has variable costs of $34.00 per unit. Fixed costs are $253,000. Kent can buy a new production machine that will increase fixed costs by $24,200 per year, but will decrease variable costs by $5.00 per unit. Compute the contribution margin per unit if the machine is purchased.
A firm has fixed costs of $25,000 associated with the manufacture of lawn mowers that cost $480 per mower to produce. The firm sells all the mowers it produces at $580 each. Find the cost, revenue and profit equations. Find the break-even quantity. (Let x be the number of mowers.)C(x) = R(x) = P(x) = break even quantity= ? mowers
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Radar Company sells bikes for $520 each. The company currently sells 4,350 bikes per year and could make as many as 4,690 bikes per year. The bikes cost $270 each to make: $160 in variable costs per bike and $110 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $500 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Contribution margin Income: (b) The company should Per Unit 0 Total
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Radar Company sells bikes for $490 each. The company currently sells 4,150 bikes per year and could make as many as 4,490 bikes per year. The bikes cost $300 each to make: $175 in variable costs per bike and $125 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 340 bikes for $470 each. Incremental fixed costs to make this order are $60 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Total Contribution margin Income (b) The company should

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