g) Briefly explain the impact of each of the following scenarios on the break-even point and the margin of Safety: (i) Increase in sales volume (ii) Increase in total fixed costs (iii) Increase in selling price per unit (iv) Decrease in variable costs per unit
g) Briefly explain the impact of each of the following scenarios on the break-even point and the margin of Safety: (i) Increase in sales volume (ii) Increase in total fixed costs (iii) Increase in selling price per unit (iv) Decrease in variable costs per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
- g) Briefly explain the impact of each of the following scenarios on the break-even point and the margin of
Safety:
(i) Increase in sales volume
(ii) Increase in total fixed costs
(iii) Increase in selling price per unit
(iv) Decrease in variable costs per unit
![Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following
information to a single part which is used in the production of a wind instrument. The business earned
Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under
pressure from shareholders to increase operating income in 2020 and is therefore considering the
implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for
variable cost per unit and total fixed costs were as follows:
Direct Material
Direct Labour
Variable Manufacturing Overhead $48
$58
$74
Variable expenses per unit:
Fixed expenses:
Fixed Manufacturing Overhead
Fixed Selling Costs
Fixed Administrative Costs
$215,000
$65,000
$160,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8766db28-c43b-4b7d-a00b-8195edb010ff%2F74d30ea4-3d11-4ec9-9356-f929ca02b6d0%2F1evw5de_processed.png&w=3840&q=75)
Transcribed Image Text:Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following
information to a single part which is used in the production of a wind instrument. The business earned
Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under
pressure from shareholders to increase operating income in 2020 and is therefore considering the
implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for
variable cost per unit and total fixed costs were as follows:
Direct Material
Direct Labour
Variable Manufacturing Overhead $48
$58
$74
Variable expenses per unit:
Fixed expenses:
Fixed Manufacturing Overhead
Fixed Selling Costs
Fixed Administrative Costs
$215,000
$65,000
$160,000
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