In planning its operations for 2011 on the basis of a sales forecast of 6,000,000 ASF Inc. prepared the following estimated data Costs and Expenses Fixed Variable Direct Material 1,600,000 Labor 1,400,000 Factory overhead 600,000 900,000 Selling expenses 240,000 360,000 Administrative expenses 60,000 140,000 Required: What would be the amount of sales at the breakeven point?

In planning its operations for 2011 on the basis of a sales forecast of 6,000,000 ASF Inc. prepared the following estimated data Costs and Expenses Fixed Variable Direct Material 1,600,000 Labor 1,400,000 Factory overhead 600,000 900,000 Selling expenses 240,000 360,000 Administrative expenses 60,000 140,000 Required: What would be the amount of sales at the breakeven point?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.16E

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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

In planning its operations for 2011 on the basis of a sales forecast of 6,000,000 ASF Inc. prepared the following estimated data Costs and Expenses

Fixed Variable

Direct Material 1,600,000

Labor 1,400,000

Factory overhead 600,000 900,000

Selling expenses 240,000 360,000

Administrative expenses 60,000 140,000

Required:

What would be the amount of sales at the breakeven point?

2,250,000
4,000,000
3,500,000
5,300,000

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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