Question

1. If your company has Total Fixed Cost = $800,000, Total Sales Revenue = $2,225,000, Total Variable Cost = $1,335,000, and Number of Units = 25,000, what is the number of units you need to sell to break even?
2. If your company has Total Fixed Cost = $141,000, Selling Price per Unit = $29.00, and Variable Cost per Unit = $7.71, what is the sales revenue you need to generate to break even?
3. If your company has Net Operating Income = $855,000, Total Fixed Cost = $185,000, and Total Sales Revenue = $1,300,000, what is the sales revenue you need to generate to reach your target profit $2,171,700?
4. If your company has Unit Contribution Margin = $29.38, Number of Units = 36,000, and Net Operating Income = $94,500, what is the number of units you need to sell to break even?
5. If your company has Total Variable Cost = $740,000, Total Contribution Margin = $1,110,000, and Total Fixed Cost = $112,000, what is the sales revenue you need to generate to break even?
6. If your company has Total Fixed Cost = $490,000, Unit Contribution Margin = $69.43, and Contribution Margin Ratio = 0.8, what is the number of units you need to sell to reach your target profit of $1,751,500?
7. If your company has Total Fixed Cost = $500,000, Total Sales Revenue = $2,225,000, Total Variable Cost = $667,500, and Unit Contribution Margin = $62.30, what is the sales revenue you need to generate to reach your target profit $2,728,350?

Answer 1

Answer;

Requirement 1

Total Fixed Cost = $800,000 ; Total Sales Revenue = $2,225,000 ; Total Variable Cost = $1,335,000 ; Number of Units = 25,000

Contribution per unit = (2225000 - 1335000 ) / 25000 = $35.60

Breakeven in units = 800000 / 35.60 = 22472 units ;

Requirement 2

Total Fixed Cost = $141,000 ; Variable Cost per Unit = $7.71 ; Selling Price per Unit = $29.00 ;

Contribution Margin ratio = ( 29 - 7.71 ) / 29 = 73.41%

Breakeven in dollars = 141000 / 73.41% = $192072

Requirement 3

Net Operating Income = $855,000 ; Total Fixed Cost = $185,000 ; Total Sales Revenue = $1,300,000 target profit $2,171,700

Variable cost = 1300000 - 185000 - 855000 = 260000 ;Contribution Margin ratio = (1300000 - 260000 ) / 1300000 = 80%

Target Sales = ( 185000 + 2171700 ) / 80% = $2945875

Requirement 4

Unit Contribution Margin = $29.38 ; Number of Units = 36,000 ; Net Operating Income = $94,500

Fixed Cost = ( 29.38 x 36000 ) - 94500 = 963180

Breakeven in units = 963180 / 29.38 = 32784 units ;

Requirement 5

Total Variable Cost = $740,000 ; Total Contribution Margin = $1,110,000 ; Total Fixed Cost = $112,000

Total Sales = 740000 + 1110000 = 1850000 ; Contribution Margin ratio =1110000 / 1850000 = 60%

Breakeven in dollars = 112000 / 60% = $186667

Requirement 6

Total Fixed Cost = $490,000 ; Unit Contribution Margin = $69.43 ; Contribution Margin Ratio = 0.8

target profit of $1,751,500

Target Sales = ( 490000 + 1751500 ) / 80% = $2801875

Requirement 7

Total Fixed Cost = $500,000 ; Total Sales Revenue = $2,225,000 ; Total Variable Cost = $667,500 ;

Unit Contribution Margin = $62.30 ; target profit $2,728,350

Contribution Margin ratio = ( 2225000 - 667500 ) / 2225000 = 70%

Target Sales = ( 500000 + 2728350 ) / 70% = $4611929