Ch. 8-student - The break-even point is the point in the...

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Unformatted text preview: The break-even point is the point in the volume of activity where the organizations revenues and expenses are equal. 8-1 Sales 250,000 $ Less: variable expenses 150,000 Contribution margin 100,000 Less: fixed expenses 100,000 Net income- $ 8-2 Sales revenue Variable expenses Fixed expenses = Profit Unit Unit sales sales price price Sales Sales volume volume in units in units Unit Unit variable variable expense expense Sales Sales volume volume in units in units ($500 X) X) ($300 X) X) $80,000 = $0 ($200 X) X) $80,000 = $0 X = 400 surf boards X = 400 surf boards Consider the following information developed by the accountant at Curl, Inc.: 8-3 Total Per Unit Percent Sales (500 surf boards) 250,000 $ 500 $ 100% Less: variable expenses 150,000 300 60% Contribution margin 100,000 $ 200 $ 40% Less: fixed expenses 80,000 Net income 20,000 $ For each additional surf board sold, Curl generates $200 in contribution margin. 8-4 Total Per Unit Percent Sales (500 surf boards) 250,000 $ 500 $ 100% Less: variable expenses 150,000 300 60% Contribution margin 100,000 $ 200 $ 40% Less: fixed expenses 80,000 Net income 20,000 $ 8-5 Fixed expenses Fixed expenses Unit contribution margin Unit contribution margin = = Break-even point Break-even point (in units) (in units) Total Per U nit Percent Sales (500 surf boards) 250,000 $ 500 $ 100% Less: variable expenses 150,000 300 60% C ontribution margin 100,000 $ 200 $ 40% Less: fixed expenses 80,000 N et income 20,000 $ $ $ 80,000 80,000 $ $ 200 200 = 400 surf boards = 400 surf boards Here is the proof! 8-6 Total Per Unit Percent Sales ( 400 surf boards) 200,000 $ 500 $ 100% Less: variable expenses 120,000 300 60% Contribution margin 80,000 $ 200 $ 40% Less: fixed expenses 80,000 Net income- $ 400 $500 = $200,000 400 $500 = $200,000 400 $300 = $120,000 400 $300 = $120,000 Calculate the break-even point in sales dollars rather...
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This note was uploaded on 04/08/2008 for the course ACCT 202 taught by Professor Houskeeper during the Spring '08 term at San Diego State.

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Ch. 8-student - The break-even point is the point in the...

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