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.
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Chapter 21 Solutions
Loose Leaf for Fundamental Accounting Principles
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