Break-Even Sales and Sales to Realize a Target Profit For the current year ending October 31, Papadakis Company expects fixed costs of $422,400, a unit variable cost of $46, and a unit selling price of $68. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize a target profit of $96,800. units
Break-Even Sales and Sales to Realize a Target Profit For the current year ending October 31, Papadakis Company expects fixed costs of $422,400, a unit variable cost of $46, and a unit selling price of $68. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize a target profit of $96,800. units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![### Break-Even Sales and Sales to Realize a Target Profit
For the current year ending October 31, Papadakis Company expects fixed costs of $422,400, a unit variable cost of $46, and a unit selling price of $68.
a. **Compute the anticipated break-even sales (units).**
[Input box for units]
b. **Compute the sales (units) required to realize a target profit of $96,800.**
[Input box for units]
**Instructions:**
- To find the break-even point in units, use the formula:
\[
\text{Break-even (units)} = \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}
\]
- To find the units required for a target profit, use the formula:
\[
\text{Required Sales (units)} = \frac{\text{Fixed Costs} + \text{Target Profit}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}
\]
**Interface:**
- A button labelled “Check My Work” for verifying calculations.
- Navigation buttons “Previous” and “Next” to move through different sections.
This section serves as a practical application for understanding break-even analysis and target profit calculations in managerial accounting.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79274d20-f2d5-4c8d-ae55-726dbf765493%2Fdbbf451e-76a9-4eb7-b293-89d40523afa8%2F0kapm1g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Break-Even Sales and Sales to Realize a Target Profit
For the current year ending October 31, Papadakis Company expects fixed costs of $422,400, a unit variable cost of $46, and a unit selling price of $68.
a. **Compute the anticipated break-even sales (units).**
[Input box for units]
b. **Compute the sales (units) required to realize a target profit of $96,800.**
[Input box for units]
**Instructions:**
- To find the break-even point in units, use the formula:
\[
\text{Break-even (units)} = \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}
\]
- To find the units required for a target profit, use the formula:
\[
\text{Required Sales (units)} = \frac{\text{Fixed Costs} + \text{Target Profit}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}
\]
**Interface:**
- A button labelled “Check My Work” for verifying calculations.
- Navigation buttons “Previous” and “Next” to move through different sections.
This section serves as a practical application for understanding break-even analysis and target profit calculations in managerial accounting.
Expert Solution
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Step 1: Explanation of Breakeven Point
The break-even point is the level of sales at which a company covers all its costs, resulting in neither profit nor loss.
It's the point where total revenue equals total expenses.
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