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:

$\text{Break-even}\text{point}\text{in}\text{Sales}\left(\text{units}\right)=\frac{\text{Fixed}\text{Costs}}{\text{Contribution}\text{Margin}\text{per}\text{unit}}$

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.