Question
I am struggling with the following accounting problem. I need to calculate the following breakeven point in dollars. Sales 240 units or $1,200,000 ($5.00 per
I am struggling with the following accounting problem. I need to calculate the following breakeven point in dollars.
Sales 240 units or $1,200,000 ($5.00 per unit), cost of goods sold 784,000, gross profit 416,000, operating expense are 280,000 for selling and 156,000 for administrative expenses.
The analysis indicates 75% of COGS are variable, 42% of selling are variable and 40% of administrative are variable. Those numbers are $588,000, 117,600 and 62,400.
The fixed cost are 25% of COGS, 58% of selling and 60% of administrative those numbers being 196,000, 162,400, 93,600.
There is a proposal to increase units by 25%, add 25 cent increase in unit cost and price would be set at $5.25 per unit. That means the revenue is 1,575,000 with 300,000 units
I have tried several attempts at getting the breakeven dollars with no luck. I need your help.
Thanks
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