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
Want to see the full answer?
Check out a sample textbook solution
Chapter 21 Solutions
Connect 2-Semester Access Card for Fundamental Accounting Principles
- Acorn Construction (calendar-year-end C corporation) has had rapid expansion during the last half of the current year due to the housing market's recovery. The company has record income and would like to maximize its cost recovery deduction for the current year. (Use MACRS Table 1, Table 2, Table 3, Table 4, and Table 5.) Note: Round your answer to the nearest whole dollar amount. Acorn provided you with the following information: Asset Placed in Service Basis New equipment and tools August 20 $ 3,800,000 Used light-duty trucks October 17 2,000,000 Used machinery November 6 1,525,000 Total $ 7,325,000 The used assets had been contributed to the business by its owner in a tax-deferred transaction two years ago. a. What is Acorn's maximum cost recovery deduction in the current year?arrow_forwardGeneral accountingarrow_forwardQuick answer of this accounting questionsarrow_forward
- I want to correct answer general accounting questionarrow_forwardDon't use ai given answer accounting questionsarrow_forwardMultiple Choice 2-32 Educational Incentives (LO 2.14) Wendy is a single taxpayer and pays tuition of $7,800 in 2021. Her 2021 AGI is $66,000. What is the amount of Wendy's tuition deduction? X a. $2,000 O b. $0 O c. $3,733.33 O d. $4,000 O e. $7,800arrow_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