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

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