EXERCISE 5-6 Break-Even Analysis LO5-5 Mauro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company's monthly fixed expense is $4,200. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales?

EXERCISE 5-6 Break-Even Analysis LO5-5 Mauro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company's monthly fixed expense is $4,200. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales?

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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Question

Provide a short narrative of your analysis of the problem. Explain what theories/ concepts apply, how, and why. Then present the solution/computation. Write a short narrative explaining the meaning of the final answer - its implication to the firm. Write a short recommendation/conclusion based on the analysis and solutions. You solved a current problem only. How can you provide for the future? What about contingencies that may arise? What proactive measures can you take?

EXERCISE 5–6 Break-Even Analysis LO5-5
Mauro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company's monthly fixed expense is $4,200.
Required:
1. Calculate the company's break-even point in unit sales.
2. Calculate the company's break-even point in dollar sales.
3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales?

1,2
3
Fixed Expense (a)
Selling Price per Unit
Variable Expense per Unit
Breakeven Point Unit Sales (a/b)
(b)
Breakeven Point Unit Sales (a)
Selling Price per Unit (b)
Breakeven Point in Dollar Sales (axb)
Fixed Expense(a)
Selling Price per Unit
Variable Expense per Unit
Breakeven Point in Unit Sales (a/b)
(b)
Breakeven Point Unit Sales (a)
Selling Price per Unit (b)
Breakeven Point in Dollar Sales (axb)
4,200
15
12
1,400
1,400
15
21,000
4,800
15
12
1,600
1,600
15
24,000

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