1. At Flint Company\'s break-even point of 9,600 units, fixed costs are $249,600
ID: 2376804 • Letter: 1
Question
1. At Flint Company's break-even point of 9,600 units, fixed costs are $249,600 and variable costs are $633,600 in total. The unit sales price is:
a. $66.
b. $26.
c. $40.
d. $92.
e. $118.
2. Conan Company has total fixed costs of $119,000. Its product sells for $59 per unit and variable costs amount to $45 per unit. Next year Conan Company wishes to earn a pretax income that equals 35% of fixed costs. How many units must be sold to achieve this target income level?
a. 7,636.
b. 41,650.
c. 11,475.
d. 53,599.
e. 2,975.
3.
The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year. If Griffith Corporation is able to achieve the budgeted level of sales, its margin of safety in dollars would be (Do not round intermediate calculations):
a. $263,235.
b. $291,429.
c. $249,165.
d. $151,000.
e. $229,714.
241,000 Fixed factory overhead 105,000 Variable factory overhead 151,000 Fixed marketing costs 111,000 Variable marketing costs 51,000 1,423,800 Pretax income $40,200
Explanation / Answer
Hi,
Please find the answers as follows:
Part 1:
Selling Price Per Unit = (Contribution + Variable Cost)/Sales at Break Even = (249600+633600)/9600 = $92
Note:
Contribution is equal to fixed cost at break even point.
Part 2:
Sales = (Fixed Cost + Estimated/Desired Profit/Contribution Per Unit = (119000 + .35*119000)/(59 - 45) = 11475 Units
Part 3:
MOS = Sales - Break Even Sales
Break Even Sales in Dollars = Fixed Cost/Contribution Margin Ratio = (105000 + 111000)/(256200/1464000) = 1234286
MOS = 1464000 - 1234286 = 229714
Thanks.
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