Introduction:
Break Even Sales is very useful for determining the level at which organization is able to recover all its fixed expenses. Sometime when sales comprises of combination of products – then we have to calculate the Selling price of the standard Mix and calculate Break Even sales for the Selling price / contribution of the standard Mix.
To Calculate:
We are required to calculate the selling price of composite Unit.
Answer to Problem 21SP
Solution
The Selling price of Composite units is $ 4750
Explanation of Solution
Explanation:
The calculations are given here:
| Business Solutions | ||||||
| Answer S. No. | Details | Desk | Chair | Value Composite unit | ||
| $ | No. | $ | No. | $ | ||
| Selling Price | 1250 | 500 | ||||
| Selling Qty | 3 | 2 | 5 | |||
| 1 | Sales Price Per composite unit | 4750 | ||||
| Variable Cost Per Unit | 750 | 250 | ||||
| Units | 3 | 2 | 5 | |||
| 2 | Variable Cost Per Composite Unit | 2750 | ||||
| Contribution per Composite Unit | 2000 | |||||
| Fixed Expenses | 120000 | |||||
| 3 | No of Composite Units to break even | 60 | ||||
| 4.1 | Sales of Desk | 60*3 | 180 | |||
| 4.2 | Sales of Chair | 60*2 | 120 | |||
Conclusion: Selling price of Composite unit is $ 4750
Introduction:
Break Even Sales is very useful for determining the level at which organization is able to recover all its fixed expenses. Sometime when sales comprises of combination of products – then we have to calculate the Selling price of the standard Mix and calculate Break Even sales for the Selling price / contribution of the standard Mix.
To Calculate:
We are required to calculate the Variable Cost of composite Unit.
Answer to Problem 21SP
Solution
The Variable Cost of Composite units is $ 2750
Explanation of Solution
Explanation:
The calculations are given here:
| Business Solutions | ||||||
| Answer S. No. | Details | Desk | Chair | Value Composite unit | ||
| $ | No. | $ | No. | $ | ||
| Selling Price | 1250 | 500 | ||||
| Selling Qty | 3 | 2 | 5 | |||
| 1 | Sales Price Per composite unit | 4750 | ||||
| Variable Cost Per Unit | 750 | 250 | ||||
| Units | 3 | 2 | 5 | |||
| 2 | Variable Cost Per Composite Unit | 2750 | ||||
| Contribution per Composite Unit | 2000 | |||||
| Fixed Expenses | 120000 | |||||
| 3 | No of Composite Units to break even | 60 | ||||
| 4.1 | Sales of Desk | 60*3 | 180 | |||
| 4.2 | Sales of Chair | 60*2 | 120 | |||
Conclusion: Variable Cost of Composite unit is $ 2750.
Introduction:
Break Even Sales is very useful for determining the level at which organization is able to recover all its fixed expenses. Sometime when sales comprises of combination of products – then we have to calculate the Selling price of the standard Mix and calculate Break Even sales for the Selling price / contribution of the standard Mix.
To Calculate:
We are required to calculate the Break Even Point in composite Unit.
Answer to Problem 21SP
Solution
The Break even point in Composite unit is 60 Units.
Explanation of Solution
Explanation:
The calculations are given here:
| Business Solutions | ||||||
| Answer S. No. | Details | Desk | Chair | Value Composite unit | ||
| $ | No. | $ | No. | $ | ||
| Selling Price | 1250 | 500 | ||||
| Selling Qty | 3 | 2 | 5 | |||
| 1 | Sales Price Per composite unit | 4750 | ||||
| Variable Cost Per Unit | 750 | 250 | ||||
| Units | 3 | 2 | 5 | |||
| 2 | Variable Cost Per Composite Unit | 2750 | ||||
| Contribution per Composite Unit | 2000 | |||||
| Fixed Expenses | 120000 | |||||
| 3 | No of Composite Units to break even | 60 | ||||
| 4.1 | Sales of Desk | 60*3 | 180 | |||
| 4.2 | Sales of Chair | 60*2 | 120 | |||
Conclusion: Break Even Point in composite units is 60 Units.
Introduction:
Break Even Sales is very useful for determining the level at which organization is able to recover all its fixed expenses. Sometime when sales comprises of combination of products – then we have to calculate the Selling price of the standard Mix and calculate Break Even sales for the Selling price / contribution of the standard Mix.
To Calculate:
We are required to calculate the Number of units sold for each product to achieve break Even.
Answer to Problem 21SP
Solution
We are required to sell 180 units of Desk and 120 units of Chair to achieve Break Even.
Explanation of Solution
Explanation:
The calculations are given here:
| Business Solutions | ||||||
| Answer S. No. | Details | Desk | Chair | Value Composite unit | ||
| $ | No. | $ | No. | $ | ||
| Selling Price | 1250 | 500 | ||||
| Selling Qty | 3 | 2 | 5 | |||
| 1 | Sales Price Per composite unit | 4750 | ||||
| Variable Cost Per Unit | 750 | 250 | ||||
| Units | 3 | 2 | 5 | |||
| 2 | Variable Cost Per Composite Unit | 2750 | ||||
| Contribution per Composite Unit | 2000 | |||||
| Fixed Expenses | 120000 | |||||
| 3 | No of Composite Units to break even | 60 | ||||
| 4.1 | Sales of Desk | 60*3 | 180 | |||
| 4.2 | Sales of Chair | 60*2 | 120 | |||
Conclusion: We need to sell 180 Units of Modular Desk and 120 units of Office Chairs to achieve break even.
Want to see more full solutions like this?
Chapter 21 Solutions
Fundamental Accounting Principles
- For this year, Jackson Enterprises has $25,000 net earnings on the income statement and $10,000 net cash inflow from operating activities, $18,000 net cash outflow from investing activities, and $22,000 cash inflow from financing activities on the statement of cash flows. What is the accruals total reported for this period?arrow_forwardFind out net incomearrow_forwardWhat is the division's margin of this financial accounting question?arrow_forward
- Waht is the correct option? General accounting questionarrow_forwardSilverline Enterprises has Total Assets of $9,750, Contributed Capital of $5,200, and Retained Earnings of $850. What is the total amount of liabilities on the balance sheet? a. $4,600 b. $3,700 c. $4,750 d. $9,100 e. None of the abovearrow_forwardPlease Solve this Questionarrow_forward
- Several years ago, a parent company acquired all of the outstanding common stock of its subsidiary for a purchase price of $320,000. On the acquisition date, this purchase price was $75,000 more than the subsidiary's book value of Stockholders' Equity. The AAP was entirely attributable to Goodwill. On the date of acquisition, the parent company's management believed that the goodwill had a 10-year useful life. Since the date of acquisition, the subsidiary has reported a cumulative net income of $260,000 and paid $105,000 in dividends to its parent company. Compute the balance of the Equity Investment account on the parent's balance sheet, assuming that the Goodwill asset has not declined in value since the date of acquisition.arrow_forwardwhat is sunset's total asset turnover ratio?arrow_forwardwhat amount and direction during that same period?arrow_forward
- Lark Industries incurs annual fixed costs of $90,000. Variable costs for Lark’s product are $50 per unit, and the sales price is $75 per unit. Lark desires to earn an annual profit of $45,000. Use the contribution margin ratio approach to determine the sales volume in dollars and units required to earn the desired profit.arrow_forwardSunset Corporation had sales of $200,000, year-end receivables of $25,000, inventories of $40,000, and total assets of $120,000. It uses a 365-day year for ratio calculations. What is Sunset's total asset turnover ratio?arrow_forwardAccounting?arrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education