3.30 Accounting 211 - Breakeven Point increases 667 units...

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Accounting 211 Tuesday, March 30th, 1999 Announcements: no class on Thursday Lecture notes: Example:
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Net Sales 900,000 - VC - 630,000 CM 270,000 - FC - 300,000 Net Income - 30,000 Sales price per unit = $300 Units = net sales / price per unit = 900,000 / 300 = 3,000 Variable Cost per Unit
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VC / units = 630,000 / 3,000 = $210 CM per Unit 300 - 210 = $90 CM Ratio CM / sales = 90 / 300 = 30% How many additional units need to be sold in order to break even? Change in CM seeking / CM per unit = 30,000 / 90 = 33 units What is the change in net income if sales increase by 500 units? Change in CM = 500 x 90 = $45,000 What happens to the breakeven point when: Fixed costs change: FC increase = BE increase, FC decrease = BE decrease Variable costs change: VC increase = BE increase, VC decrease = BE decrease Change in selling price: SP increase = BE decrease, SP decrease = BE increase Fixed Costs Increase $60,000 Net Income decreases $60,000
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Unformatted text preview: Breakeven Point increases 667 units Sales Price Increases $15 per Unit Sales Price = $315 VC = 210 CM per Unit = 315 - 210 = 105 New Breakeven Point FC / CM per Unit = 360,000 / 105 = 3,429 Change = 96 Units Example: # Units Produced: 1000 1500 Utilities Cost 600 850 VC per Unit = change in cost / change in units produced = 250 / 500 = 0.5 VC = 1,000 x 0.5 = 500 FC = 600 - 500 = $100 Chapter 17 Example: 1998 est. overhead = 360,000 1998 est. machine hours = 30,000 Predetermined Overhead Rate 360,000 / 30,000 = $12 per machine hour Actual machine hours incurred in 1998 = 31,000 1998 applied Overhead 31,000 x 12 = 372,000 1998 Actual Overhead = 380,000 Underapplied Overhead = 380,000 - 372,000 = 8,000 Example: 1/1/98 12/31/98 AR 37,000 31,000 Inventory 29,000 41,000 AP 17,000 15,000 Equipment 100,000 112,000 AD--Equip. 15,000 18,000...
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