Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: 1) If Shonda & Shonda purchases the new machinery, what will be the company’s break-even point in dollars? units sold 1400
Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: 1) If Shonda & Shonda purchases the new machinery, what will be the company’s break-even point in dollars? units sold 1400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows:
1) If Shonda & Shonda purchases the new machinery, what will be the company’s break-even point in dollars?
| units sold | 1400 |
| sales price per unit | 225 |
| variable cost per unit | 145 |
| fixed costs | 52,000 |
| breakeven in units | 650 |
| contribution margin ratio | 0.36 |
| breakeven in dollars | 146,250 |
| sales | 315,000 |
| variable costs | 203,000 |
| fixed costs | 52,000 |
| net income (loss) | 60,000 |
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