In: Accounting

# Gelbart Company manufactures gas grills. Fixed costs amount to $25,428,000 per year. Variable costs per gas... Gelbart Company manufactures gas grills. Fixed costs amount to$25,428,000 per year. Variable costs per gas grill are $350, and the average price per gas grill is$1,000.

1. How many gas grills must Gelbart Company sell to break even?

___ gas grills

2. If Gelbart Company sells 42,235 gas grills in a year, what is the operating income?
$__ 3. If Gelbart Company’s variable costs increase to$370 per grill while the price and fixed costs remain unchanged, what is the new break-even point? If required, round your answer to the nearest whole number.
___ gas grills

## Solutions

##### Expert Solution

Answer:-1)- Break-even point in unit sales = Fixed cost/Contribution per unit

=$25428000/$650 per unit= 39120 gas grills

2)-Operating income = (Contribution margin per unit*Units sold)-Fixed costs

=$650 per gas grills*42235 gas grills =$27452750

3)-Break-even point in unit sales = Fixed cost/Contribution per unit

=$25428000/($1000 per unit-$370 per unit)= 40362 gas grills Where:- Contribution margin per unit=Selling price per unit-Variable cost per unit =$1000 per unit-$350 per unit =$650 per unit

## Related Solutions

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A company has $30 per unit in variable costs and$1,200,000 per year in fixed costs. Demand is estimated to be 104,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?