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Determine the break-even point in dollar, assuming fixed costs are $60,000 per period, variable costs are $8.00 per unit, and the sales price is $14.00 per unit. $140,000 $66,667 $10,000 $50,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6MC: If a company has fixed costs of $6.000 per month and their product that sells for $200 has a...

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

Determine the break-even point in dollar, assuming fixed costs are $60,000 per period, variable costs are $8.00 per unit, and the sales price is $14.00 per unit.
$140,000
$66,667
$10,000
$50,000

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Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
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Rooney Company reported the following data regarding the product it sells: Sales price Contribution margin ratio 75 20% Fixed costs $450,000 a. What is the break-even point in dollars? In units? b. To obtain a profit of $45,000, what must the sales be in dollars? In units?