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Ch. 8-student

# 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 organization’s 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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Ch. 8-student - The break-even point is the point in the...

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