# Accounting Essay

3106 Words Dec 16th, 2014 13 Pages
Exercise 3-1B N = Number of units to break-even Sales − Variable cost − Fixed cost = Profit (Sales price x N) − (Variable cost per unit x N) = Fixed cost + Profit (Contribution margin per unit x N) = Fixed cost + Profit N = (Fixed cost + Profit) ÷ Contribution margin per unit N = (\$750,000 + \$200,000) ÷ (\$57 − \$32) = 30,000 units Break-even dollars = \$57 x 30,000 units = \$1,710,000 b. N = (\$750,000 + 21,000) ÷ (\$57 − \$32) = 38,000 units Sales in \$ = \$57 x 38,000 = \$2,166,000 Exercise 3-2B N = Number of units to break-even N = Fixed cost ÷ Contribution margin per unit N = \$84,000 ÷ (\$78 – \$43) N = 2,400 units Break-even in dollars = \$78 x 2,400 units = \$187,200 Exercise 3-3B Contribution margin/Unit = Sales price – Variable cost/Unit = \$60 …show more content…
Prices can be lowered once competitive forces enter the market. Exercise 3-6B Sales revenue (\$100 x 80,000)  Gross profit = Cost of goods sold  Total units = Total product cost per tire  Fixed cost per tire = Variable cost per tire \$8,000,000 1,440,000 \$6,560,000 80,000 82 25 \$57

Variable cost = \$57 x 80,000 = \$4,560,000 Total contribution margin = \$8,000,000  \$4,560,000 = \$3,440,000

a.

Exercise 3-7B Sales price per unit \$420 Variable cost per unit (270) Contribution margin per unit \$150 Break-even in units = Fixed Cost ÷ Contribution margin per unit Break-even in units = \$750,000 ÷ \$150 Break-even in units = 5,000 Required sales in units = (Fixed cost + Profit) ÷ Contribution margin Required sales in units = (\$750,000 + \$150,000) ÷ \$150 Required sales in units = 6,000 Exercise 3-8B

b.

c.

Required sales = (Fixed cost + Desired profit) ÷ Contribution margin per unit Required sales = (\$750,000 + \$90,000) ÷ (\$50 – \$30) Required sales = 42,000 units at old price Required sales = (Fixed cost + Desired profit) ÷ Contribution margin per unit Required sales = (\$750,000 + \$90,000) ÷ (\$46 – \$30) Required sales = 52,500 units at new price Additional units required: 52,500 – 42,000 = 10,500 units Exercise 3-9B Required sales = (Fixed cost + Desired profit) ÷ Contribution margin Required sales = (\$750,000 + \$90,000 + \$42,000) ÷ (\$46 – \$30) Required sales = 55,125

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