The break-even point in dollars and in units.

Question

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Answer 1

Question

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

c)

To determine

The new break-even points in dollars and in units.

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

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Answer 2

Question

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

c)

To determine

The new break-even points in dollars and in units.

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

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Answer 3

Question

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

c)

To determine

The new break-even points in dollars and in units.

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

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Answer 4

Question

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

c)

To determine

The new break-even points in dollars and in units.

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

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Answer 5

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

c)

To determine

The new break-even points in dollars and in units.

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

Answer 6

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

Answer 7

Chapter 3, Problem 18PSA

a)

To determine

The break-even point in dollars and in units.

Answer 8

a)

Expert Solution

Answer to Problem 18PSA

The break-even point in dollars and in units are $2,025,000 and 81,000 units respectively.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.40=$2,025,000$

Hence, the break-even in dollars is $2,025,000.

Formula to compute the break-even in units:

$Break-even units=Break-evenSales price$

Compute the break-even in units:

$Break-even units=Break-evenSales price=$2,025,00025=81,000$

Hence, the break-even in units is 81,000.

Answer 13

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

Answer 14

b)

To determine

The amount of sales in dollars and in units, to gain $270,000 profit.

Answer 15

b)

Expert Solution

Answer to Problem 18PSA

The amount of sales in dollars and in units, to gain $270,000 profit are $2,700,000 and 108,000 units.

Answer 16

b)

Expert Solution

Answer 17

b)

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Formula to compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio$

Compute the sales in dollars:

$Sales in dollar=(Fixed costs+Desired profit)Contribution margin ratio=($810,000+$270,000)0.40=$2,700,000$

Hence, the amount of sales in dollar is $2,700,000.

Formula to compute the sales in units:

$Sales in units=Sales in dollarsSales price$

Compute the sales in units:

$Sales in units=Sales in dollarsSales price=$2,700,00025=108,000$

Hence, the sales in units is 108,000.

Answer 20

c)

To determine

The new break-even points in dollars and in units.

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

Answer 21

c)

To determine

The new break-even points in dollars and in units.

Answer 22

c)

Expert Solution

Answer to Problem 18PSA

The new break-even points in dollars and in units are $1,620,000 and 54,000 units.

Answer 23

c)

Expert Solution

Answer 24

c)

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Formula to compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]$

Compute the variable cost:

$Variable cost=[Sales price×(1−Contribution margin ratio)]=$25×(1−0.40)=$25×0.60=$15 per unit$

Hence, the variable cost is $15 per unit.

Formula to compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost$

Compute the per unit contribution margin:

$Contribution margin per unit=Increase in the sale price−Variable cost=$30−$15=$15$

Hence, the contribution margin per unit is $15.

Formula to compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price$

Compute the new contribution margin ratio:

$New contribution margin ratio=Contribution margin per unitIncrease in sales price=$15$30=0.50$

Hence, the new contribution margin ratio is 0.50.

Formula to compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio$

Compute the break-even in dollars:

$Break-even=Fixed costsContribution margin ratio=$810,0000.50=$1,620,000$

Hence, the break-even in dollars is $1,620,000.

Formula to compute the break-even in units:

$Break-even units=Break-even in dollarsSales price$

Compute the break-even in units:

$Break-even units=Break-even in dollarsIncrease in sales price=$1,620,00030=54,000$

Hence, the break-even in units is 54,000.

Answer 27

Ch. 3 - Prob. 1LO Ch. 3 - Prob. 2LO Ch. 3 - Prob. 3LO Ch. 3 - Prob. 4LO Ch. 3 - Prob. 5LO Ch. 3 - Prob. 6LO Ch. 3 - Prob. 1Q Ch. 3 - Prob. 2Q Ch. 3 - Prob. 3Q Ch. 3 - 4. If Company A has a projected margin of safety...

The break-even point in dollars and in units.

The break-even point in dollars and in units.

Answer to Problem 18PSA

Explanation of Solution

The amount of sales in dollars and in units, to gain $270,000 profit.

Answer to Problem 18PSA

Explanation of Solution

The new break-even points in dollars and in units.

Answer to Problem 18PSA

Explanation of Solution

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