The Layal Corporation has compiled the following financial data for a new retail facility: annual fixed costs are estimated at $100,000; selling price per unit of product estimated at $15, variable cost per unit estimated at $5. The company is also interested to achieve a profit of 120,000 in the first year of operations and 200,000 in the second year of operations. Formulas to be used Break-even point units - Fixed costs / selling price per unit-variable cost per unit Break-even point $- Break-even point Units x selling price per unit = Break-even point units (profit) - Fixed costs + Profit/ selling price per unit-variable cost per unit Break-even point Profit $-Break-even point units - Fixed costs / selling price-variable cost Case 1 ). Calculate the breakeven point in units and $ and the contribution margin. Answer Case 2 ( Calculate the breakeven point in units and $ and contribution margin taking into account the profit that the corporation is planning to have. Answer Case 3 Calculate a) the breakeven point in units and $ b) contribution margin c) the net income if the corporation anticipates its fixed costs to increase by 180,000 and the selling price to increase by 40%. Answer:
The Layal Corporation has compiled the following financial data for a new retail facility: annual fixed costs are estimated at $100,000; selling price per unit of product estimated at $15, variable cost per unit estimated at $5. The company is also interested to achieve a profit of 120,000 in the first year of operations and 200,000 in the second year of operations. Formulas to be used Break-even point units - Fixed costs / selling price per unit-variable cost per unit Break-even point $- Break-even point Units x selling price per unit = Break-even point units (profit) - Fixed costs + Profit/ selling price per unit-variable cost per unit Break-even point Profit $-Break-even point units - Fixed costs / selling price-variable cost Case 1 ). Calculate the breakeven point in units and $ and the contribution margin. Answer Case 2 ( Calculate the breakeven point in units and $ and contribution margin taking into account the profit that the corporation is planning to have. Answer Case 3 Calculate a) the breakeven point in units and $ b) contribution margin c) the net income if the corporation anticipates its fixed costs to increase by 180,000 and the selling price to increase by 40%. Answer:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
The Layal Corporation has compiled the following financial data for a new retail facility: annual fixed
costs are estimated at $100,000; selling price per unit of product estimated at $15, variable cost per
unit estimated at $5. The company is also interested to achieve a profit of 120,000 in the first year of
operations and 200,000 in the second year of operations.
Formulas to be used
Break-even point units - Fixed costs / selling price per unit-variable cost per unit
Break-even point $- Break-even point Units x selling price per unit
Break-even point units (profit) - Fixed costs + Profit/ selling price per unit-variable cost per unit
Break-even point Profit $ =Break-even point units - Fixed costs / selling price-variable cost
Case 1
). Calculate the breakeven point in units and $ and the contribution margin.
Answer
Case 2 (
Calculate the breakeven point in units and $ and contribution margin taking into
account the profit that the corporation is planning to have.
Answer
Case 3
. Calculate a) the breakeven point in units and $ b) contribution margin c) the net
income if the corporation anticipates its fixed costs to increase by 180,000 and the selling price to
increase by 40%.
Answer:
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