Question

Break-Even Sales and Cost-Volume-Profit Chart

For the coming year, Cleves Company anticipates a unit selling price of $134, a unit variable cost of $67, and fixed costs of $395,300.

Required:

1. Compute the anticipated break-even sales in units.

2. Compute the sales (units) required to realize income from operations of $154,100.

3. Determine the probable income (loss) from operations if sales total 9,400 units. If required, use the minus sign to indicate a loss.

Answer 1

Requirement 1

Breakeven Units= 5900 units

Requirement 1 Working
A	Sale Price per unit	$          134.00
B	Variable Cost per Unit (12+3)	$            67.00
C=A x B	Unit Contribution	$            67.00
D	Fixed cost	$ 395,300.00
E=D/C	Breakeven in units	5900

Requirement 2

Units to be sold to earn profit of $154100= 8200 units

A	Fixed Cost	$      395,300.00
B	Expected annual profits	$      154,100.00
C=A+B	Total contribution required	$      549,400.00
D	Unit contribution	$   67.00
E=C/D	No. of units to earn target profit	8,200
F=E x $134 per unit	Amount of Sale dollars	$ 1,123,400.00

Requirement 3

Income at Units sales of 9400 = $ 234,500

Income Statement
Sales Revenue (137 x 9400)	$    1,259,600.00
Less: Variable cost (67 x 9400)	$       629,800.00
Contribution margin	$       629,800.00
Fixed cost	$       395,300.00
Operating Income	$       234,500.00