Question
In: Accounting
For the coming year, Cleves Company anticipates a unit selling price of $138, a unit variable cost of $69, and fixed costs of $800,400.
Break-Even Sales and Cost-Volume-Profit Chart
For the coming year, Cleves Company anticipates a unit selling price of $138, a unit variable cost of $69, and fixed costs of $800,400.
Required:
1. Compute the anticipated break-even sales
(units).
units
2. Compute the sales (units) required to
realize a target profit of $386,400.
units
3. Construct a cost-volume-profit chart, assuming maximum sales of 23,200 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.
| $2,235,600 | |
| $2,001,000 | |
| $1,600,800 | |
| $1,200,600 | |
| $966,000 |
4. Determine the probable income (loss) from
operations if sales total 18,600 units. If required, use the minus
sign to indicate a loss.
Solutions
Expert Solution
1) brrak even units = FC/contribution oer unit
= 800400/(138-69)
= 11600 units
2) 17200
Contribution = fixed cost + profit = 800400 + 386400 = 1186800
Sales unit = 1186800/69 = 17200
3) PV RATION = 50%
At $2235600
| Sales | 2235600 |
| Variable cost | 1117800 |
| Contribution | 1117800 |
| Fixed cost | 800400 |
| Profit | 317400 |
At $2001000
| Sales | 2001000 |
| V.C. | 1000500 |
| Contribution | 1000500 |
| Fixed cost | 800400 |
| Profit | 200100 |
At $1600800
| Sales | 1600800 |
| V.C. | 800400 |
| CONTRIBUTION | 800400 |
| FIXED COST | 800400 |
| PROFIT | 0 |
AT $1200600
| Sales | 1200600 |
| V.C. | 600300 |
| CONTRIBUTION | 600300 |
| FIXED COST | 800400 |
| PROFIT | (200100) |
At $966000
| Sales | 966000 |
| V.C. | 483000 |
| CONTRIBUTION | 483000 |
| FIXED COST | 800400 |
| PROFIT | (317400) |
4) at sale of 18600 units
| Sales | 2566800 |
| V.C. | 1283400 |
| CONTRIBUTION | 1283400 |
| FIXED COST | 800400 |
| PROFIT | 483000 |
For any query please comment and
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ekkarill92 answered 2 years agoRelated Solutions
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