The contribution margin for the year was 120000 after selling 50000 units at 4

# The contribution margin for the year was 120000 after

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after selling 50,000 units at \$4 each. Determine the break-even point in dollars and units. Sales\$200,000Variable costs80,000Contribution margin\$120,000Fixed costs50,400Income from operations\$ 69,600Unit contribution margin = \$2.40 = \$120,000/50,000 units Break-even point (units) = 21,000 units = \$50,400/\$2.40 Contribution margin ratio = 60% = \$120,000/\$200,000Break-even point (sales) = \$84,000 = \$50,400/60% or 21,000 × \$4 per unit 4ACCT 5000 CHAPTER 21 HANDOUT18. In 20Y5, a paper manufacturer has the income from operations shown below for sales of 7,500 units. Determine the new break-even sales in each situation. Round answers to the nearest whole sales dollar. Sales \$60,000 Variable costs 24,000 Contribution margin \$36,000 Fixed costs 19,200Income from operations \$16,800 Current break-even sales = \$32,000 = \$19,200/60%Sales price per unit = \$8.00Variable cost per unit = \$3.20a. Decrease in selling price per unit by 20%Sales price per unit = \$6.40Contribution margin ratio = \$3.20/\$6.40Increase in break-even sales to \$38,400 = \$19,200/50%b. Increase in fixed costs by \$2,000Increase in fixed costs by \$2,000.Increase in break-even sales to \$35,333 = \$21,200 / 60% (0.6)c. Decrease in variable costs by \$1.20 Variable cost per unit = \$2.00 Contribution margin ratio = 25%Increase in break-even sales to \$76,800= \$19,200/25% 5ACCT 5000 CHAPTER 21 HANDOUT28. Cold Weather Gear manufactures two products, Jackets and Hats. During the past year, the company incurred \$124,800 of fixed costs. Use the information shown below to calculate the break-even point in units of each product and total sales for the company. Use the sales mix to determine the mixed product. Jackets Hats Unit selling price \$55 \$15 Unit variable cost 15 3 Units sold 95,000 30,000 JacketsHatsMixed ProductUnit selling price\$55\$15\$45.40Unit variable cost15312.12Unit contribution margin\$40\$12\$33.28Units sold95,00030,000Sales mix76%24%Mixed product unit selling price = (\$55 × 76%) + (\$15 × 24%) Mixed product unit variable cost = (\$15 × 76%) + (\$3 ×24%)Break-even point (units) for mixed product = 3,750 units = \$124,800/\$33.28 Unit sales of Jackets = 2,850 units = 3,750 × 76%Unit sales of Hats = 900 units = 3,750 × 24%Break-even point (sales) = \$170,250 = (2,850 units × \$55 per unit) + (900 units × \$15 per unit) or 3,750 units × \$45.40 per unit #### You've reached the end of your free preview.

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