Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Shanti, a leading firm in the sports industry, produces basketballs for the consumer market. For the year ended December 31, 2021, Shanti sold 263,100 basketballs
Shanti, a leading firm in the sports industry, produces basketballs for the consumer market. For the year ended December 31, 2021, Shanti sold 263,100 basketballs at an average selling price of $39 per unit. The following information also relates to 2021 (assume constant unit costs and no variances of any kind). Requirement 1. Calculate the breakeven point (in basketballs sold) in 2021 under: (a) Variable costing and (b) Absorption costing. a. Calculate the breakeven point in units under variable costing. (Round the breakeven point up to the nearest whole number as needed.) Total fixed costs + [ /Contribution margin per unit b. Calculate the breakeven point in units under absorption costing. First, select the formula and enter the amounts. Then, solve for Q in the next step. (Assume "Q" is the breakeven point in units. Abbreviations b. Absorption costing x(Breakeven units x ( M Q Breakeven point under variable costing )]/ )]/ units. = BEP under absorption costing Q 2021 data Inventory, January 1, 2021: Inventory, December 31, 2021: Fixed manufacturing costs: Fixed administrative costs: Direct materials costs: Direct labour costs: Print 34,600 basketballs 21,500 basketballs $ 1,000,000 $ 2,841,600 $ $ 11 per basketball 12 per basketball Done Q (the breakeven point) under absorption costing is Requirement 2. Suppose direct materials costs were $13 per basketball instead. Assuming all other data are the same, calculate the minimum number of basketballs Shanti must have sold in 2021 to attain a target operating income $90,000 under: (a) Variable costing and (b) Absorption costing. (Round your answers up to the nearest whole unit.). a. Variable costing The minimum number of basketballs Shanti must have sold to attain its target operation income under variable costing is 18182 basketballs. X
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started