Question

In: Accounting

Break-Even Sales and Sales to Realize Income from Operations For the current year ending October 31,...

Break-Even Sales and Sales to Realize Income from Operations

For the current year ending October 31, Yentling Company expects fixed costs of $750,200, a unit variable cost of $64, and a unit selling price of $95.

a. Compute the anticipated break-even sales (units).
units

b. Compute the sales (units) required to realize income from operations of $173,600.
units

Solutions

Expert Solution

  1. Contribution margin per unit = Selling price – Variable cost per unit

                                                     = 95 – 64

                                                     = $31 per unit

     Break-even point in unit sales = Fixed costs / Contribution margin per unit

                                                      = $750,200 / $31

                                                      = 24,200 units

  1. Contribution margin = Income from operations + Fixed costs

                                                      = $173,600 + $750,200

                                                      = $923,800

                      Sales (units) = Contribution margin / Contribution margin per unit

                                           = $923,800 / $31

                                           = 29,800 units

ekkarill92 answered 1 year ago
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