Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity:Lower Limit Upper LimitProduction (units)4.0006,000Production costs:Direct materials$ 60,000$ 90,000Direct labor.80,000120,000Overhead:Indirect materials25,00037,500Indirect labor40,00050,000Depreciation20,00020,000Selling and administrative expenses:Sales salaries50,00065,000Office salaries30,00030,000Advertising.45,00045,000Other15,00020,000Total$365,000$477,500REQUIRED:2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)3. Prepare a break-even chart. 2.Break-even sales volume (units)a. Total costs at upper production limitb. Total costs at lower production limitc. Change in total costsd. Total units at upper production limite. Total units at lower production limitf. Change in total unitsg. Variable cost per unit (c + f)56.25h. Units produced with lower production limiti. Variable costs (c x d)j. Fixed costs (b – i)k. Selling price per unit - Variable cost per unitI. Break-even sales volume in units (j + k)43.753,200Break-even sales volume (dollars)a. Total fixed costsb. 1- (Variable cost per unit + Sales price per unit)c. Break-even sales volume in dollars (a + b)140,000$320,0003.For each unit level of sales, enter the total sales dollars and total costs. The chart at right will be plotted as you enter the amounts.After all points are plotted, grab and move the labels provided at the left to identify each area.UnitsSales $Costs $1,000E2,0003,0004,0005,0006,0007,000

Name: Grand Canyon Manufacturing Inc. produces and sells a product with a p
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Description: Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity:Lower Limit Upper LimitProduction (units)4.0006,000Production

Variable cost is the cost that changes with the change in production levels. It is directly…

Business

Accounting

Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Lower Limit Upper Limit Production (units) 4,000 6,000 Production costs: $ 60,000 $ 90,000 Direct materials Direct labor... 80,000 120,000 Overhead: Indirect materials 25,000 37,500 Indirect labor..... 40,000 50,000 20,000 ..... Selling and administrative expenses: Depreciation . 20,000 Sales salaries .. 50,000 65,000 Office salaries. 30,000 30,000 Advertising.. 45,000 45,000 Other ... 15,000 20,000 Total... $365,000 $477,500 ..... REQUIRED: 2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)

Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Lower Limit Upper Limit Production (units) 4,000 6,000 Production costs: $ 60,000 $ 90,000 Direct materials Direct labor... 80,000 120,000 Overhead: Indirect materials 25,000 37,500 Indirect labor..... 40,000 50,000 20,000 ..... Selling and administrative expenses: Depreciation . 20,000 Sales salaries .. 50,000 65,000 Office salaries. 30,000 30,000 Advertising.. 45,000 45,000 Other ... 15,000 20,000 Total... $365,000 $477,500 ..... REQUIRED: 2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)

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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