Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit To compute: the anticipated break-even sales (units).

Question

On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $846,000 Current liabilities $564,000 Noncurrent assets 2,538,000 Long-term liabilities 470,000 Stockholder's equity 2,350,000 Total assets $3,384,000 Total liabilities and stockholder's equity $3,384,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At December 31, 2026, Pharoah reports the following balance sheet information: Current assets $752,000 Noncurrent assets (including goodwill recognized in purchase) 2,256,000 Current liabilities (658,000) Long-term liabilities (470,000) Net assets $1,880,000 It is determined that the fair value of the Pharoah division is $2,068,000.

Answer 1

Question

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

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On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $846,000 Current liabilities $564,000 Noncurrent assets 2,538,000 Long-term liabilities 470,000 Stockholder's equity 2,350,000 Total assets $3,384,000 Total liabilities and stockholder's equity $3,384,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At December 31, 2026, Pharoah reports the following balance sheet information: Current assets $752,000 Noncurrent assets (including goodwill recognized in purchase) 2,256,000 Current liabilities (658,000) Long-term liabilities (470,000) Net assets $1,880,000 It is determined that the fair value of the Pharoah division is $2,068,000.

The following transactions involving intangible assets of Oriole Corporation occurred on or near December 31, 2025. 1.) Oriole paid Grand Company $520,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Oriole is in business. 2.) Oriole spent $654,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful. 3.) In January 2026, Oriole's application for a patent (#2 above) was granted. Legal and registration costs incurred were $247,800. The patent runs for 20 years. The manufacturing process will be useful to Oriole for 10 years. 4.) Oriole incurred $168,000 in successfully defending one of its patents in an infringement suit. The patent expires during December 2029. 5.) Oriole incurred $446,400 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of…

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Question

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

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Answer 3

Question

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

Expert Solution & Answer

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Answer 4

Question

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

Expert Solution & Answer

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Answer 5

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

Answer 6

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

Answer 7

Chapter 21, Problem 21.3APR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To compute: the anticipated break-even sales (units).

Answer 8

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

Answer 9

2.

To determine

the amount of sales (units) if the company desires a target profit of $240,000.

Answer 10

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

Answer 11

3.

To determine

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

Answer 12

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

Answer 13

4.

To determine

the probable income (loss) from operations if sales total 16,000 units.

Answer 14

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Solution Summary: The author explains the formula to calculate the break-even point in sales units.

the amount of sales (units) if the company desires a target profit of $240,000.

To construct: a cost-volume-profit chart assuming the sales of 20,000 units within the relevant range.

the probable income (loss) from operations if sales total 16,000 units.

Chapter 21 Solutions