Question
Break-Even Sales and Cost-Volume-Profit Chart Last year, Ridgecrest Inc. had sales of $5,001,920, based on a unit selling price of $440. The variable cost per
Break-Even Sales and Cost-Volume-Profit Chart Last year, Ridgecrest Inc. had sales of $5,001,920, based on a unit selling price of $440. The variable cost per unit was $300, and fixed costs were $1,136,800. The maximum sales within Ridgecrest Inc.'s relevant range are 20,000 units. Ridgecrest Inc. is considering a proposal to spend an additional $226,800 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity. 1. Construct a cost-volume-profit chart on your own paper and determine the break-even sales for last year. Break-even point in dollars $ Break-even point in units 3. Construct a cost-volume-profit chart (on your own paper) and determine the break-even sales for the current year, assuming that a noncancelable contract is signed for the additional billboard advertising. No changes are expected in the unit selling price or other costs. In your computations, round the contribution margin ratio to one decimal place. Break-even point in dollars $ 4. Using the cost-volume-profit chart prepared in part (3), determine (a) the income from operations if sales total 12,700 units and (b) the maximum income from operations that could be realized during the year. Income from operations at 12,700 units $
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