1) Introduction: Contribution Margin: • Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin. • Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor. • Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment Contribution per unit = Sales price per unit - Variable Costs per unit Breakeven Point: • Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero. • Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses. Breakeven point (Units) = Fixed Cost / Contribution Per Unit Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) To Prepare: One year multi product breakeven analysis

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Answer 1

Question

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

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4. ABG produces and sells a single product at the price of 20 euros. During its first year of operation (20X7), the company had no initial stocks. The production cost of a product unit is as follows: Variable production cost of 8 euros per unit. Fixed production cost 9,600 euros. Also, the company has fixed sales expenses of 5,400 euros. In the first year of operation, the company had budgeted that it would produce and sell 3,200 units of product. In fact, during the period production and sales amounted to 3,200 units of product. Requested: To calculate the operating result of the company for the first year of its operation using absorption and marginal costing. Calculate the operating result of the company for the first year of its operation using absorption and marginal costing, assuming that sales for the period amounted to 2,700 units and 500 units remained as final inventory. What is the value of the final inventory of stocks with both costing techniques in this case?

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Answer 2

Question

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

Expert Solution & Answer

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Answer 3

Question

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

Answer 6

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

Answer 7

Chapter 21, Problem 8BTN

To determine

1)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Prepare:

One year multi product breakeven analysis

Answer 8

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

Answer 9

To determine

2)

Introduction:

Contribution Margin:

• Contribution Margin refers to the excess of Sales revenues over variable and fixed costs. Since it contributes to the overall profitability of the business it is referred to as contribution margin.

• Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.

• Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment

$Contribution per unit = Sales price per unit - Variable Costs per unit$

Breakeven Point:

• Breakeven point is the monetary value of sales or number of units of sales where the contribution equals the fixed costs and the profit / loss is zero.

• Breakeven point is considered as the minimum sales needed to sustain a business without incurring losses.

$\begin{array}{l} Breakeven point (Units) = Fixed Cost / Contribution Per Unit \\ Breakeven point (Value) = Sales Price per unit x Breakeven Point (units) \end{array}$

To Determine:

Results of One year multi product breakeven analysis

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

Ch. 21 - Prob. 1DQ Ch. 21 - Prob. 2DQ Ch. 21 - When output volume increases, do fixed costs per...Ch. 21 - Prob. 4DQ Ch. 21 - Prob. 5DQ Ch. 21 - Describe the contribution margin ratio in...Ch. 21 - Prob. 7DQ Ch. 21 - Prob. 8DQ Ch. 21 - Prob. 9DQ Ch. 21 - Prob. 10DQ

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