{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

week 3 homework

week 3 homework - Number of Units to earn Target Income =...

This preview shows pages 1–2. Sign up to view the full content.

Break-even units ¼ Total fixed cost Price _ Variable cost per unit Number of units to earn target income ¼ Fixed cost þ Target income Price _ Variable cost per unit Let's say a company produces a single product with a sale price of \$25 per unit. The variable cost per unit is \$15 and the company incurs fixed costs of \$50,000 per month. What is the breakeven point for this company? How much would we expect in profit for every unit sold above breakeven?? What if the company has its budget set at \$35,000 target profit?? How many units must it sell?? A) Break Even units = Total Fixed Cost/price-Variable Cost per unit Break Even units = \$50,000/\$25 - \$15 Break Even units = \$50,000/\$10 Break Even units = 5,000 Sales Revenue would be 5,000 * \$25 = \$125,000 B) Any unit over the break-even point would have a profit of \$10 per unit. C) Number of Units to earn target income = Fixed cost + Target Income/ Price – Variable Costs Number of Units to earn target income = \$50,000 + \$35,000/ \$25 – 15

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Number of Units to earn Target Income = \$85,000/ \$10 Number of Units to earn Target Income = 8500 NEW ITEM - Wednesday - Let's work through Case 7-20, Chapter 7 page 305, dealing with Ethics and the Manager: Absorption Costing Income Statements. Work through questions presented in the problem. Please begin with question one and then move through the subsequent questions included in the problem. 1) Break Even Units = Total Fixed Cost/Price-Variable Cost per unit Break Even Units = \$11,448,000/\$120 - \$87.20 Break Even Units = \$11,448,000/\$32.80 Break Even Units = 349,024 Sales Revenue = 349,024 * \$120 = \$41,882,880 Number of Units to earn target income = Fixed cost + Target Income/ Price Variable Costs Number of Units to Earn Target Income = \$11,448,000 + 2,000000/\$120 87.20 Number of Units to Earn Target Income = \$13,448,000/\$32.80 Number of Units to Earn Target Income = 410,000...
View Full Document

{[ snackBarMessage ]}