Question

In: Finance

Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee...

Break-Even Units: Units for Target Profit

Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 18,000 units at a price of $360 each. Product costs include:

Direct materials $76.00
Direct labor $43.00
Variable overhead $11.00
Total fixed factory overhead $597,000

Variable selling expense is a commission of 4 percent of price; fixed selling and administrative expenses total $94,200.

Required:

1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations.
$ per unit

Calculate the contribution margin per unit.
$ per unit

2. How many units must Jay-Zee Company sell to break even? Round your answer to the nearest whole number.
units

Prepare an income statement for the calculated number of units. If an amount is zero, enter "0". Do NOT round Break-even units and, if required, round your answer to the nearest dollar.

Jay-Zee Company
Income Statement
$
$
$

3. Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $391,392. Round your answer to the nearest whole number.
units

4. What if the Jay-Zee Company wanted to achieve a target operating income of $378,000? Would the number of units needed increase or decrease compared to your answer in Requirement 3? Round your answer to the nearest whole number.

Compute the number of units needed for the new target operating income.
units

Solutions

Expert Solution

1)sales commission per unit =selling price* %

            = 360 *4%

          = $ 14.4 per unit (rounded to 14)

Total variable cost =76+43+11+14=144

contribution per unit = selling price -variable cost

          = 360 -144

             = $ 216 per unit

2)Units to breakeven =Fixed cost /contribution per unit

              = [597000+94200] /216

               = 691200 /216

               =3200 units

INCOME STATEMENT
sales (360*3200) 1152000
less:variable cost (144*3200) (460800)
contribution per unit 691200
less:fixed cost (691200)
net operating income 0

3)Units to sell to achieve target income = [Fixed cost+ target income ]/contribution per unit

         =[691200+391392]/216

           = 1082592/216

                 = 5012 units

4)

Units to sell to achieve target income = [Fixed cost+ target income ]/contribution per unit

         =[691200+378000]/216

          = 1069200/216

         = 4950 units

Number of units decreased as compare to part 3

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee...
Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 24,000 units at a price of $330 each. Product costs include: Direct materials $69.00 Direct labor $40.00 Variable overhead $10.00 Total fixed factory overhead $488,150 Variable selling expense is a commission of 6 percent of price; fixed selling and administrative expenses total $94,400. Required: 1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar....
Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee...
Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 18,000 units at a price of $340 each. Product costs include: Direct materials $71.00 Direct labor $41.00 Variable overhead $10.00 Total fixed factory overhead $608,500 Variable selling expense is a commission of 5 percent of price; fixed selling and administrative expenses total $95,000. Required: 1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar....
Break-Even Sales: Sales for Target Profit Health-Temp Company is a placement agency for temporary nurses. It...
Break-Even Sales: Sales for Target Profit Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 23,500 hours next year. Health-Temp charges the hospitals and clinics $90 per hour and has variable costs of $75.60 per hour (this includes the payment to the nurse). Total fixed costs equal $321,000. Required: 1. Calculate the contribution margin per unit and the contribution...
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year...
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year is as follows: Total Per Unit Sales $3,054,500 $41.00 Total variable cost 1,466,160 19.68 Contribution margin $ 1,588,340 $ 21.32 Total fixed cost 1,378,190 Operating income $ 210,150 Required: 1. Compute the break-even point in units. If required, round your answer to nearest whole value. units 2. How many units must be sold to earn a profit of $240,000? If required, round your answer...
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income...
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Werner Company produces and sells disposable foil baking pans to retailers for $2.50 per pan. The variable cost per pan is as follows: Direct materials $0.30 Direct labor 0.57 Variable factory overhead 0.74 Variable selling expense 0.17 Fixed manufacturing cost totals $136,541 per year. Administrative cost (all fixed) totals $18,619. Required: 1. Compute the number of pans that must be sold for Werner to...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new unit purchases as well as replacement canopies. Campbell developed its business plan for the year based on the assumption that canopies would sell at a price of $400 each. The variable costs for each canopy were projected at $200, and the annual fixed costs were budgeted at $120,000. Campbell’s after-tax profit objective was...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new unit purchases as well as replacement canopies. Campbell developed its business plan for the year based on the assumption that canopies would sell at a price of $400 each. The variable costs for each canopy were projected at $200, and the annual fixed costs were budgeted at $120,000. Campbell’s after-tax profit objective was...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that...
Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new unit purchases as well as replacement canopies. Campbell developed its business plan for the year based on the assumption that canopies would sell at a price of $400 each. The variable costs for each canopy were projected at $200, and the annual fixed costs were budgeted at $120,000. Campbell’s after-tax profit objective was...
Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year,...
Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 3,010,000 pages at a price of $0.1 each in the coming year. Product costs include:   Direct materials $0.015     Direct labor $0.005     Variable overhead $0.002     Total fixed overhead $183,400   There is no variable selling expense; fixed selling and administrative expenses total $35,000. Required: In your computations that involve the contribution margin ratio, do not round the ratio. 1. Calculate the...
Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year,...
Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,990,000 pages at a price of $0.06 each in the coming year. Product costs include:   Direct materials $0.009     Direct labor $0.003     Variable overhead $0.001     Total fixed overhead $83,960   There is no variable selling expense; fixed selling and administrative expenses total $42,000. Required: In your computations that involve the contribution margin ratio, do not round the ratio. 1. Calculate the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT