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In-class exercises - Exercise 2 pg 148 Sales price Variable...

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Exercise 2, pg 148 Sales price $60 per unit Variable Costs $8per unit Fixed Costs $200,000 At Breakeven, Revenue = Costs or Revenue - Variable Costs - Fixed Costs = 0 Sx - VCx - FC = 0 $60x - $8x - $200,000 = 0 CMx - FC = 0 $52x - $200,000 = 0 CMx = FC $52x = $200,000 x = 3846.15 units Break-even point in dollars = Breakeven point in units x Sales price per unit = 3,847 units x $60 per unit = $230,820 Leah Carter Enterprises will breakeven when total sales revenue equals $230,820 Leah Carter Enterprises will breakeven at a sales level of 3847 units .
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Exercise 3, pg 148 Fixed Cost a $9 $45,000 b $8 $5 $48,000 c $12 25% $30,000 d $12 80% $48,000 e $5 $3 $24,000 Let x represent the number of units required to breakeven in each scenario. a Breakeven point in units where CM = FC CM per unit x # of units = FC # of units = FC = $45,000 CM per unit $9 per unit = 5,000 units b Sx - VCx - FC = 0 OR BE = Fixed Costs $8x - $5x - $48,000 = 0 CM per unit $3x = $48,000 = $48,000 x = $48,000 $8 - $5 $3 = $48,000 = 16,000 units $3 = 16,000 units $ per unit Ratio c Selling price $12 100% Contribution Margin 25% CM per unit = $3 Selling Price x CM ratio $3x - $30,000 = 0 OR BE in Sales = Fixed Costs x = $30,000 CM ratio $3 = $30,000 = 10,000 units 25% = $120,000 in Sales BE in Units = $120,000 / $12 per unit = 10,000 units d. $ per unit Ratio Selling price $12 100% Variable Cost 80% Contribution Margin $2 20%
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