Question

In: Accounting

Jasper Company has variable costs per unit of $20, fixed costs of $300,000, and a break-even...

Jasper Company has variable costs per unit of $20, fixed costs of $300,000, and a break-even point of 60,000 units. What will be the new break-even point in units if variable costs decrease by $3 per unit and fixed costs increase by $100,000?

93,333 units

33,333 units

50,000 units

200,000 units

At the break-even point:

Sales would be equal to total costs.

Contribution margin would be equal to total fixed costs.

Sales would be equal to fixed costs.

Both sales would be equal to total costs and contribution margin would be equal to total fixed costs are correct.

Which of the following statements about a cost-volume-profit graph is correct?

A cost-volume-profit graph is prepared with activity (number of units) on the vertical axis.

The intersection of the total sales line and the total cost line represents the break-even point.

The area above the break-even point represents the area of loss.

The total cost line intersects the vertical axis at the dollar amount of total variable costs.

Joseph Company has variable costs of $80 per unit, total fixed costs of $200,000, and a break-even point of 5,000 units. If the variable cost per unit decreases by $8, how many units must Joseph Company sell to break-even?

2,778 units

2,500 units

6,250 units

4,167 units

Expert Solution



	VC PU	20
	Fixed Costs	300000
	First we need to calculate Sales Price:
	BEP	60000
	Fixed Cost/(Sales Price-VC)	60000
	300000/(SP-20)	60000
	300000	60000SP-1200000
	1500000	60000SP
	SP	25.00

1	Existing Status:		Revised:
	SP	25.00	SP	25.00
	Less: VC PU	20.00	Less: VC PU	17.00	(20-3)
	Contribution PU	5.00	Contribution PU	8.00

	Fixed Costs	300000	Fixed Costs	400000	(3Lac+1Lac)

	BEP	60000	BEP	50000
		(300000/5)		(400000/8)
			Answer is 50000/-


2	AT Break Even Point:
	Contribution Margin would be equal to Total Fixed Costs
	AT BEP Company is at No Profit No Loss Situation

3	The Intersection of the total sales line and the total cost line represents the break even point
	Where Cost=Sales; No profit or Loss
	It is the BEP

4
	VC PU	80
	Fixed Costs	200000
	First we need to calculate Sales Price:
	BEP	5000
	Fixed Cost/(Sales Price-VC)	5000
	200000/(SP-80)	5000
	200000	5000SP-400000
	600000	5000SP
	SP	120.00

	Existing Status:		Revised:
	SP	120.00	SP	120.00
	Less: VC PU	80.00	Less: VC PU	72.00	(80-8)
	Contribution PU	40.00	Contribution PU	48.00

	Fixed Costs	200000	Fixed Costs	200000

	BEP	5000	BEP	4166.666667
		(200000/40)		(200000/48)
			Answer is 4167/-

ekkarill92 answered 1 year ago

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