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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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### 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.
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
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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