Question

De Anza College Accounting 1C online BEP Project Scott Osborne
First Name________________Last Name____________________
Please print first and last names as it shows on the attendance roster.
10 Homework Points
During the upcoming year De Anza Co. expects the following data:
Expected unit selling price is: $125
Expected unit variable cost is: $70
Expected total fixed costs are: $1,512,500
Required
1. Calculate breakeven point in both units and dollars. (Show work in blank space below.)
Round units to the nearest unit and round dollars to the nearest dollar.
2. Compute sales units required to realize income from operations of $630,000.
3. Construct a cost-volume-profit chart assuming maximum sales in the relevant
range of 40,000 units. ( Use the available graph template below.)
Label the following parts of the graph: Sales Revenue, Fixed Costs, Variable Costs,
Total Costs, Profit Area, Loss Area, and Break Even Point.

Answer 1

1.

Calculate the breakeven point in both units and dollars.

Contribution margin per unit = Sales - Variable cost

= $125 - $70

= $55

Breakeven point (Units) = Fixed Cost   Contribution margin per unit

= $1,512,500 $55

= 27,500 units

Breakeven point (in dollars) = BEP units   Selling price per unit

= 27,500 units $125

= $3,437,500

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2. Compute sales units required to realize income from operations of $630,000.

Sales units = [Fixed cost + Desired Income]   Contribution margin per unit

= [$1,512,500 + $630,000] $55

= 38,955 units

3.

The available graph template is missing in question.