Question

In: Finance

17. Using the following information, calculate the Break-Even in terms of dollars and number of units....

17. Using the following information, calculate the Break-Even in terms of dollars and number of units. (15 points)

BELT MANUFACTURER
Cost of leather per belt- $20 Cost of one belt buckle - $25
Cost to drill holes and attach buckle per belt - $5 Management payroll per month - $10,000 Operating expense per month - $20,000
Factory rent per month - $20,000
Price charged to retail store for 5 belts - $500


Cost per belt= $20, buckle /belt=$25, drill holes&buckle/belt=$5   
Fixed Expense= $10,000+$20,000+$20,000= $50,000
Avg Variable Exp Per Sale= $20+ $25+$5+$100= $150
CM= Avg $ Per Sale - Avg Variable Exp Per Sale

Solutions

Expert Solution

Answer : Calculation of Breakeven Point (in units)

Breakeven Point = Fixed Cost / (Selling Price - Variable Cost)

Selling Price per belt = 500 / 5 = 100

Variable Cost per Belt = 20 + 25 + 5 = 50

Fixed Cost = 10000 + 20000 + 20000 = 50000

Breakeven Point = Fixed Cost / (Selling Price - Variable Cost)

= 50000 / (100 - 50)

= 1000 belts

Breakeven Point (in dollars ) = Breakven Point in units * Price charged

= 1000 belts * 100

= 100,000


Related Solutions

Please explain how to calculate Break-Even in units and Sales dollars using the Contribution Margin Approach....
Please explain how to calculate Break-Even in units and Sales dollars using the Contribution Margin Approach. Please explain the impact  to Break-Even (increase,decrease,remain the same) under the following three different scenarios: 1. increase in fixed costs 2.increase in variable costs 3. increase in sales per unit
1. Given the following, depict fully and explain break-even in units, break-even in dollars, total revenue...
1. Given the following, depict fully and explain break-even in units, break-even in dollars, total revenue line, total cost line, fixed cost line, break-even point, etc. Fixed Cost: $120,000 Sales per Unit: $15.00 Variable cost per Unit: $3.00 Include a discussion regarding sensitivity analysis for an inelastic product.
how can the break-even formula be altered to calculate the number of units that must be...
how can the break-even formula be altered to calculate the number of units that must be sold to acheive a desired level of target income?
Question 1 Calculate the break-even point in dollars from the following information. Selling price per unit...
Question 1 Calculate the break-even point in dollars from the following information. Selling price per unit is $50, variable costs per unit are $30 and fixed costs for the year are $25 000 a. $1 250 b. Unable to be determined from the information given c. $83 333 d. $41 667 e. $62 500 1 points Question 2 If McLeod Ltd’s selling price is $50 per unit, fixed costs are $499 800, and the contribution margin ratio is 0.34. The...
3.1 Required: Calculate the following: 3.1.1 Break-even quantity. (4) 3.1.2 Break-even value using the marginal income...
3.1 Required: Calculate the following: 3.1.1 Break-even quantity. (4) 3.1.2 Break-even value using the marginal income ratio. (3) 3.1.3 Margin of safety (in terms of units). (3) 3.1.4 Expected total marginal income and net profit. (5) INFORMATION Sharpe Ltd manufactures calculators. The following information was extracted from the budget for the year ended 31 December 2017: Sales Selling price per calculator Variable production cost per unit Fixed production costs Variable selling and administrative costs per unit Fixed selling and administrative...
Calculate the accounting break-even, the cash break-even and the financial break-even       points for this project....
Calculate the accounting break-even, the cash break-even and the financial break-even       points for this project. The company’s required return is 9% and the project will run       for 5 years. Round your answer up to the next highest integer. Ignore any tax effects       in calculating the cash break-even.                                     Unit Variable              Annual Fixed              Equipment Unit Price                           Cost                            Costs                          Cost $ 3,020                             $ 2,275                   $ 9,000,000                 $ 3,100.000
The break-even point tells a company the number of units or the amount of revenue that...
The break-even point tells a company the number of units or the amount of revenue that it must sell or earn in order to pay for all of its costs. At this point, the company has neither profit nor loss. Companies have two main types of costs: variable costs and fixed costs. Variable costs are those costs that vary with the number of units produced. Examples of variable costs are direct labor, direct materials and overhead. Fixed costs are those...
7. Calculating Break-Even [LO3] In each of the following cases, calculate the accounting break-even and the...
7. Calculating Break-Even [LO3] In each of the following cases, calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even. Unit Price Unit Variable Cost Fixed Costs Depreciation $2,980 46 9 $2,135 41 3 $8,100,000 185,000 2,770 $3,100,000 183,000 1,050
Consider a project with the following data: accounting break-even quantity = 24,240 units; cash break-even quantity...
Consider a project with the following data: accounting break-even quantity = 24,240 units; cash break-even quantity = 16,000 units; life = three years; fixed costs = $160,000; variable costs = $60 per unit; required return = 15 percent. Ignoring the effect of taxes, find the financial break-even quantity.
Consider a project with the following data: accounting break-even quantity = 11,175 units; cash break-even quantity...
Consider a project with the following data: accounting break-even quantity = 11,175 units; cash break-even quantity = 10,000 units; life = four years; fixed costs = $160,000; variable costs = $24 per unit; required return = 8 percent. Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)   Break-even quantity    * Please post formula used*
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT