Question

The following totals are used to create a CVP Income Statement for Frederick Company for FY2018:

Frederick Company
Selected Financial Figures
For the Year Ended 12/31/18
Sales (100 units)		$10,000
Variable Costs:
Direct Labor	$1,850
Direct Materials	1,400
Factory Overhead (variable)	2,000
Selling Expenses (variable)	600
Administrative Expenses (variable)	500
Fixed Costs:
Factory Overhead (fixed)	$850
Selling Expenses (fixed)	1,000
Administrative Expenses (fixed)	1,000

Frederick Company utilizes a JIT production system and there are no Raw Materials, Work-in-Process or Finished Goods inventories. Use this information to determine the FY 2016 breakeven point in units. Round and enter as a whole number.

Answer 1

Breakeven point in units = 78

	Per Unit	Total
Sales revenue	$ 100.00	$        10,000.00
Less: Variable costs
Direct Labor	$     18.50	$ 1,850.00
Direct Materials	$     14.00	$ 1,400.00
Factory Overhead (variable)	$     20.00	$ 2,000.00
Selling Expenses (variable)	$       6.00	$    600.00
Administrative Expenses (variable)	$       5.00	$    500.00
Total Variable cost	$     63.50	$             6,350.00
Contribution Margin	$     36.50	$             3,650.00

.

A	Sales price per unit	$                100.00
B	Variable cost per unit	$                  63.50
C=A-B	Contribution margin per unit	$                  36.50
D	Fixed expenses	$            2,850.00
E=D/C	Break Even point in Unit Sales	78