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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