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

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

DO GIVE POSITIVE RATING

ekkarill92 answered 2 years ago

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