Break-Even Sales

Currently, the unit selling price of a product is $330, the unit variable cost is $270, and the total fixed costs are $1,080,000. A proposal is being evaluated to increase the unit selling price to $370.

a. Compute the current break-even sales (units). units

b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units

Margin of Safety

a. If Canace Company, with a break-even point at $465,000 of sales, has actual sales of $750,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.

Beck Inc. and Bryant Inc. have the following operating data:

	Beck Inc.		Bryant Inc.
Sales	$180,000		$524,000
Variable costs	(72,200)		(314,400)
Contribution margin	$107,800		$209,600
Fixed costs	(58,800)		(78,600)
Operating income	$49,000		$131,000

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

Beck Inc.
Bryant Inc.

b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number.

	Dollars	Percentage
Beck Inc.	$		%
Bryant Inc.	$		%

c. The difference in the of operating income is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.

1. $

2.

b. If the margin of safety for Canace Company was 35%, fixed costs were $1,767,675, and variable costs were 65% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $