Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you please help with Scenario 1? the information is provided below: APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed

Can you please help with Scenario 1? the information is provided below:

image text in transcribedimage text in transcribed
APPLY THE CONCEPTS: Break-Even Point in Units The break-even point can be expressed in terms of sales dollars or number of units. The break-even units tells us how many units must be sold so that operating income is $0. Assume that you are part of the accounting team for Stewart Computing. The company currently expects to sell 618 units for total revenue of $21,000 each month. Stewart Computing estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $8,500 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Stewart Computing Contribution Margin Income Statement Sales 21000 Less: Variable 10500 costs Contribution 10500 margin Less: Fixed 8500 costs Operating 2000 income Feedback Stewart Computing is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). $ Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit = Units 8500 17 500 unitsScenario 1 Scenario 2 Scenario 3 Stewart will dispose of a machine After some extensive market research, Stewart has Stewart has been experiencing quality problems with in the factory. The depreciation on determined that a sales price increase of $2 per unit a materials supplier. Changing suppliers will improve that equipment is $500 per month. will not affect the sales volume and will be effective the quality of the product but will cause direct immediately. materials costs to increase by $1 per unit. 17 CM per unit: $ CM per unit: $ 19 CM per unit: 16 Break-even units: units Break-even units: 447 units 531 units

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Hospitals What They Are And How They Work

Authors: Don Griffin, Donald J Griffin

3rd Edition

076372758X, 9780763727581

More Books

Students also viewed these Accounting questions

Question

An improvement in the exchange of information in negotiations.

Answered: 1 week ago

Question

1. Effort is important.

Answered: 1 week ago