Variable cost as a percentage of sales = 60%  

 Unit Variable cost = $30 

 

 Fixed costs = $200,000 

 

 What is the break-even point in units? 

 

 195.A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Calculate the current year's sales. 

 

 196.For the current year ending January 31, Harp Company expects fixed costs of $188,500 and a unit variable cost of $51.50. For the coming year, a new wage contract will increase the unit variable cost to $55.50. The selling price of $70.00 per unit is expected to remain the same. 

      

(a)	Compute the break-even sales (units) for the current year.
(b)	Compute the anticipated break-even sales (units) for the coming year, assuming the new wage contract is signed.

 

 

 

 

 

 197. 

      

(a)	If Swannanoa Company's budgeted sales are $1,000,000, fixed costs are $350,000, and variable costs are $600,000, what is the budgeted contribution margin ratio?
(b)	If the contribution margin ratio is 30%, sales are $900,000 and fixed costs are $200,000, what is the operating profit?

 

 

 

 

 

 198.Louis Company sells a single product at a price of $65 per unit. Variable costs per unit are $45 and total fixed costs are $625,500. Louis is considering the purchase of a new piece of equipment that would increase the fixed costs to $800,000, but decrease the variable costs per unit to $42. 

 

 Required: 

 

 If Louis Company expects to sell 44,000 units next year, should they purchase this new equipment?