Question
In: Accounting
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information:
Selling Price (per unit): $10,000
Variable Costs (per unit): $7,000
Fixed Costs: $200,000
Required
Each of these are separate situations:
- What is the break-even point in total sales in dollars?
- How many units need to be sold to make a profit of $20,000?
- How many units need to be sold to make a profit of $20,000 if fixed costs increase from $200,000 to $250,000?
- How many units would they need to sell if they wanted to double profit, if the current number of units sold is 200?
Solutions
Expert Solution
Requirement A
Answer--------$666,666.67 or $666,667
Working
| A | Sale Price per unit | $ 10,000.00 |
| B | Variable Cost per Unit | $ 7,000.00 |
| C=A - B | Unit Contribution | $ 3,000.00 |
| D | Total Fixed cost | $ 200,000.00 |
| E=D/C | Breakeven point in units | 67 |
| F= E x A | Breakeven in sales dollars | $ 666,666.67 |
Requirement B
Answer--------73 units are required to be sold
Working
| A | Sale Price per unit | $ 10,000.00 |
| B | Variable Cost per Unit | $ 7,000.00 |
| C=A - B | Unit Contribution | $ 3,000.00 |
| D | Total Fixed cost + Desired Income | $ 220,000.00 |
| E=D/C | Units to be sold to earn desired Income | 73 |
Requirement C
Answer--------90 units are required to be sold
Working
| A | Sale Price per unit | $ 10,000.00 |
| B | Variable Cost per Unit | $ 7,000.00 |
| C=A - B | Unit Contribution | $ 3,000.00 |
| D | Total Fixed cost + Desired Income | $ 270,000.00 |
| E=D/C | Units to be sold to earn desired Income | 90 |
.
Requirement D
Answer--------For doubling profit they need to sell 80 units but since already 200 units are sold company is getting profit of more than 40000.
| A | Sale Price per unit | $ 10,000.00 |
| B | Variable Cost per Unit | $ 7,000.00 |
| C=A - B | Unit Contribution | $ 3,000.00 |
| D | Total Fixed cost + Desired Income (200000+40000) | $ 240,000.00 |
| E=D/C | Units to be sold to earn desired Income | 80 |
ekkarill92 answered 1 year agoRelated Solutions
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information:
Selling Price (per unit): $10,000
Variable Costs (per unit): $7,000
Fixed Costs: $200,000
Required
Each of these are separate situations:
What is the break-even point in total sales in
dollars?
How many units need to be sold to make a profit of
$20,000?
How many units need to be sold to make a profit of
$20,000 if fixed costs increase from $200,000 to
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How many units would they need to sell if they wanted
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