
a)
The break-even point in dollars and in units.
a)

Answer to Problem 18PSB
The break-even point in dollars and in units are $1,800,000 and 45,000 units respectively.
Explanation of Solution
Formula to compute the break-even in dollars:
Compute the break-even in dollars:
Hence, the break-even in dollars is $1,800,000.
Formula to compute the break-even in units:
Compute the break-even in units:
Hence, the break-even in units is 45,000.
b)
The amount of sales in dollars and in units, to gain $90,000 profit.
b)

Answer to Problem 18PSB
The amount of sales in dollars and in units, to gain $270,000 profit are $2,100,000 and 52,500 units.
Explanation of Solution
Formula to compute the sales in dollars:
Compute the sales in dollars:
Hence, the amount of sales in dollar is $2,100,000.
Formula to compute the sales in units:
Compute the sales in units:
Hence, the sales in units is 52,500.
c)
The new break-even points in dollars and in units.
c)

Answer to Problem 18PSB
The new break-even points in dollars and in units are $1,227,273 and 24,545 units.
Explanation of Solution
Formula to compute the variable cost:
Compute the variable cost:
Hence, the variable cost is $28 per unit.
Formula to compute the per unit contribution margin:
Compute the per unit contribution margin:
Hence, the contribution margin per unit is $22.
Formula to compute the new contribution margin ratio:
Compute the new contribution margin ratio:
Hence, the new contribution margin ratio is 0.44.
Formula to compute the break-even in dollars:
Compute the break-even in dollars:
Hence, the break-even in dollars is $1,227,273.
Formula to compute the break-even in units:
Compute the break-even in units:
Hence, the break-even in units is 24,545.
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Chapter 3 Solutions
Fundamental Managerial Accounting Concepts
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