Chapter 21, Problem 21SP

To determine

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

Conclusion: Selling price of Composite unit is $ 4750

To determine

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

Conclusion: Variable Cost of Composite unit is $ 2750.

To determine

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

Conclusion: Break Even Point in composite units is 60 Units.

To determine

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

Conclusion: We need to sell 180 Units of Modular Desk and 120 units of Office Chairs to achieve break even.