This

**preview**has**blurred**sections. Sign up to view the full version! View Full DocumentExercise 6-10: Break-Even Analysis (LO2, LO4, LO5)
Chi Omega Sorority is planning its annual Riverboat Extravaganza. The
Extravaganza committee has assembled the following expected costs for
the event:
Dinner (per person)
$
7
Favors and program (per person)
$
3
Band

$
1,500
Tickets and advertising
$
700
Riverboat rental
$
4,800
Floorshow and strolling entertainers
$
1,000
The committee members would like to charge $30 per person for the
evening’s activities.
Requirement 1:
Compute the break-even point for the Extravaganza (in terms of the
number of persons who must attend).
Break-even point
persons
Requirement 2:
Assume that last year only 250 persons attended the Extravaganza. If the
same number attend this year, what price per ticket must be charged to
break even?
(Omit the "$" sign in your response.)
Ticket price
$

Exercise 6-13: Break-Even Analysis; Target Profit; Margin of
Safety; CM Ratio (LO1, LO3, LO5, LO6, LO7)
Pringle Company distributes a single product. The company's sales and
expenses for a recent month follow:
Total
Per Unit
Sales
$
600,000
$
40
Variable expenses
420,000
28
Contribution margin
180,000

$
12
Fixed expenses
150,000
Net operating income
$
30,000
Requirement 1:
What is the monthly break-even point in units sold and in sales dollars?
(Omit the "$" sign in your response.)

Break-even point in units sold
units
Break-even point in sales dollars
$
Requirement 2:
Without resorting to computations, what is the total contribution margin
at the break-even point?
(Omit the "$" sign in your response.)
Contribution margin
$

Requirement 3:
(a)
How many units would have to be sold each month to earn a target profit
of $18,000? Use the contribution margin method.
Sales level in units

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