Using break-even analysis; accept or reject a special offer A company has prepared the following statistics regarding its pro- duction and sales at different capacity levels. Capacity Level Units.... Sales... Total costs: 80% 100% 80,000 100,000 $400,000 60% 60,000 $240,000 $320,000 $120,000 $160,000 150,000 150,000 $270,000 $310,000 $(30,000) $10,000 Variable..... $200,000 Fixed.... 150,000 Total costs.... $350,000 Net operating income (loss)... $ 50,000 1. At what point is break-even reached in sales dollars? In units? (Hint: Use the capacity level to determine the number of units.) If the company is operating at 60% capacity, should it accept an offer from a customer to buy 10,000 units at $3 per unit? 2.
Using break-even analysis; accept or reject a special offer A company has prepared the following statistics regarding its pro- duction and sales at different capacity levels. Capacity Level Units.... Sales... Total costs: 80% 100% 80,000 100,000 $400,000 60% 60,000 $240,000 $320,000 $120,000 $160,000 150,000 150,000 $270,000 $310,000 $(30,000) $10,000 Variable..... $200,000 Fixed.... 150,000 Total costs.... $350,000 Net operating income (loss)... $ 50,000 1. At what point is break-even reached in sales dollars? In units? (Hint: Use the capacity level to determine the number of units.) If the company is operating at 60% capacity, should it accept an offer from a customer to buy 10,000 units at $3 per unit? 2.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Using break-even analysis; accept or reject a special offer
A company has prepared the following statistics regarding its pro-
duction and sales at different capacity levels.
Capacity Level
Units...
Sales...
Total costs:
Variable.....
Fixed ....
Total costs....
60%
80%
60,000
80,000
$240,000 $320,000
$120,000 $160,000
150,000
$270,000
$(30,000)
100%
100,000
$400,000
$200,000
150,000 150,000
$310,000
$350,000
Net operating income (loss) ....
$ 10,000 $ 50,000
1. At what point is break-even reached in sales dollars? In units?
(Hint: Use the capacity level to determine the number of units.)
If the company is operating at 60% capacity, should it accept
an offer from a customer to buy 10,000 units at $3 per unit?
2.
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