In Year 1, Jay Company expects to sell 2,243 units at $110 per unit Sales are expected to increase 25 each year for years 2 4 The unit sales price will remain the same Labor is 23 of sales, Overhead 10 , Materials 5 , and Variable Sales and Admin, 4 Fixed Costs, are Factory Overhead (2 ) and Sales and Admin (4 ) Interest expense of $425 is evenly budgeted Expected Sales (units) 2,243 2,804 3,505 4,381 12,932 Unite Sales Price $110 $110 $110 $110 Total Sales Revenue $246,730 $308,413 $385,516 $481,895 $1,422,553 Variable Costs Labor $56,748 $70,935 $88,669 $110,836 $327,187 Overhead $24,673 $30,841 $38,552 $48,189 $142,255 Materials $12,337 $15,421 $19,276 $24,095 $71,128 Variable Sales and Admin $9,869 $12,337 $15,421 $19,276 $56,902 Total VC $103,627 $129,533 $161,917 $202,396 $597,472 Factory $4,935 $4,935 $4,935 $4,935 $19,738 Sales and Admin $9,869 $9,869 $9,869 $9,869 $39,477 Total Fixed Costs $14,804 $14,804 $14,804 $14,804 $59,215 EBIT $128,300 $164,075 $208,795 $264,695 $765,865 Interest Expense $106 $106 $106 $106 $425 Earning Before Taxes $128,193 $163,969 $208,689 $264,589 $765,440 Taxes $25,639 $32,794 $41,738 $52,918 $153,088 Net Income $102,555 $131,175 $166,951 $211,671 $612,352 Variable Costs Unit $46 20 $46 20 $46 20 $46 20 CM Ratio $63 80 $63 80 $63 80 $63 80 Unit CM 0 42 0 42 0 42 0 42 Breakeven in units 232 03 232 03 232 03 232 03 Breakeven in dollars $35,247 $35,247 $35,247 $35,247 Fixed Costs 367800 367800 367800 367800 Target 700000 700000 700000 700000 Breakeven in units 16,737 16,737 16,737 16,737 Breakeven in dollars $2,542,381 $2,542,381 $2,542,381 $2,542,381 over the period The company tax rate is 20 Create a breakeven chart for Jay Company based on unit increments of 250 and the revised fixed costs of $367,800 (Hint You want to graph sales, fixed costs and total costs (total variable and fixed) on one scatter plot )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 30, 2024

In Year 1, Jay Company expects to sell 2,243 units at $110 per unit. Sales are expected to increase 25% each year for years 2-4.

In Year 1, Jay Company expects to sell 2,243 units at $110 per unit. Sales are expected to increase 25% each year for years 2-4. The unit sales price will remain the same. Labor is 23% of sales, Overhead 10%, Materials 5%, and Variable Sales and Admin, 4%. Fixed Costs, are Factory Overhead (2%) and Sales and Admin (4%). Interest expense of $425 is evenly budgeted

Expected Sales (units)	2,243	2,804	3,505	4,381	12,932
Unite Sales Price	$110	$110	$110	$110
Total Sales Revenue	$246,730	$308,413	$385,516	$481,895	$1,422,553
Variable Costs
Labor	$56,748	$70,935	$88,669	$110,836	$327,187
Overhead	$24,673	$30,841	$38,552	$48,189	$142,255
Materials	$12,337	$15,421	$19,276	$24,095	$71,128
Variable Sales and Admin	$9,869	$12,337	$15,421	$19,276	$56,902
Total VC	$103,627	$129,533	$161,917	$202,396	$597,472
Factory	$4,935	$4,935	$4,935	$4,935	$19,738
Sales and Admin	$9,869	$9,869	$9,869	$9,869	$39,477
Total Fixed Costs	$14,804	$14,804	$14,804	$14,804	$59,215
EBIT	$128,300	$164,075	$208,795	$264,695	$765,865
Interest Expense	$106	$106	$106	$106	$425
Earning Before Taxes	$128,193	$163,969	$208,689	$264,589	$765,440
Taxes	$25,639	$32,794	$41,738	$52,918	$153,088
Net Income	$102,555	$131,175	$166,951	$211,671	$612,352

Variable Costs/Unit	$46.20	$46.20	$46.20	$46.20

CM Ratio	$63.80	$63.80	$63.80	$63.80
Unit CM	0.42	0.42	0.42	0.42
Breakeven in units	232.03	232.03	232.03	232.03
Breakeven in dollars	$35,247	$35,247	$35,247	$35,247


Fixed Costs	367800	367800	367800	367800
Target	700000	700000	700000	700000

Breakeven in units	16,737	16,737	16,737	16,737
Breakeven in dollars	$2,542,381	$2,542,381	$2,542,381	$2,542,381

over the period. The company tax rate is 20%.

Create a breakeven chart for Jay Company based on unit increments of 250 and the revised fixed costs of $367,800. (Hint: You want to graph sales, fixed costs and total costs (total variable and fixed) on one scatter plot.)