Introduction:
Break-even point in terms of sales units: The break-even point in sales units is the company’s fixed costs divided by the contribution margin of the company. Here, the contribution margin of the company is the selling price less the variable cost.
Break-even point in terms of sales dollars: The break-even point in sales dollars is the company’s fixed costs divided by the contribution margin ratio of the company. Here, the contribution margin of the company is the selling price less the variable cost. And the contribution margin ratio of the company is the contribution margin divided by the selling price.
CVP Chart: CVP chart is the short form of a cost volume profit chart. It shows the relationship between the units produced in a particular period, total cost involved and the sales revenues in that period.
Contribution margin income statement: It is a statement where variable costs are deducted from the sales dollars to get the contribution margin and then all fixed costs are deducted from the contribution margin to get the net
1.
To calculate:
(a) Estimated Break-even point in terms of sales units
(b) Estimated Break-even point in terms of sales dollars
2.
To Prepare:
A CVP chart
3.
To Show:
Contribution margin income statement at break-even point
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Chapter 21 Solutions
WORKING PAPERS F/ FUND ACCOUNTING
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- What is the gross profit margin?arrow_forwardA company currently has $78 million in sales, $36 million in current assets, $62 million in fixed assets, and $24 million in accounts payable. The fixed assets are currently operated with full capacity and will change proportionally with the sales growth. Sales are projected to be $105 million, current assets are projected to be $45.3 million, and accounts payable are projected to be $29.5 million. What are fixed assets projected to be, given this information? Provide Accurate Answerarrow_forwardI need help with this financial accounting question using standard accounting techniques.arrow_forward
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