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# Chapter 15 - Chapter15BreakEven/OperatingLeverage CompanyA...

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Chapter 15 – Break-Even / Operating Leverage   Be sure to show how you determine the answer s  to these problems.    Use the following information to answer the questions below:     Company A Company B Company C average selling price per unit 50.00 125.00 75.00 average variable cost per  unit 40.00 110.00 60.00 units sold 75,000 35,000 40,000 fixed costs 300,000 100,000 200,000   1. What is the profit for each company at the indicated sales volume? Calculation of Profit for Company A Revenue \$3,750,000 Less: COGS \$3,000,000 Gross Profit \$750,000 Less: Fixed Costs \$300,000 Net Profit \$450,000 Calculation of Profit for Company B Revenue \$4,375,000 Less: COGS \$3,850,000 Gross Profit \$525,000 Less: Fixed Costs \$100,000 Net Profit \$425,000 Calculation of Profit for Company C Revenue \$3,000,000 Less: COGS \$2,400,000 Gross Profit \$600,000 Less: Fixed Costs \$200,000 Net Profit \$400,000 2. What is the break-even point in units for each company? Break Even Point in Units for Company A Break Even Point in Units = Total Fixed Costs  ÷

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Chapter 15 - Chapter15BreakEven/OperatingLeverage CompanyA...

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