Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions