Problem 2: 5 points Johnson Company has a unit-selling price of $450, variable c

Question

Problem 2: 5 points

Johnson Company has a unit-selling price of $450, variable costs per unit of $270, and fixed costs of $265,580.

Instructions: Compute the break-even point in units using either (a) the mathematical equation or (b) contribution margin per unit. Round answer up to the next whole unit.

Break even in units = __________
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Problem 3: 6 points

For Perez Company, variable costs are 70% of sales, and fixed costs are $225,000. Management's net income goal is $68,610.

Instructions: Compute the required sales needed to achieve management's target net income of $68,610.

Required sales needed = __________________

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Explanation / Answer

Johnson Company has a unit-selling price of $450, variable costs per unit of $270, and fixed costs of $265,580.

Instructions: Compute the break-even point in units using either (a) the mathematical equation or (b) contribution margin per unit. Round answer up to the next whole unit.

Break even in units = 1476

Show computations here

Break even in units = fixed costs/(selling price-variable costs per unit)

Break even in units = 265580/(450-270)

Break even in units = 1475.44

Break even in units = 1476 unit

Problem 3: 6 points

For Perez Company, variable costs are 70% of sales, and fixed costs are $225,000. Management's net income goal is $68,610.

Instructions: Compute the required sales needed to achieve management's target net income of $68,610.

Required sales needed = 978,700

Show computations here:

Contribution Margin ratio = 1- variable costs are 70% of sales

Contribution Margin ratio = 1-0.70

Contribution Margin ratio = 0.30 or 30%

Required sales needed = (fixed costs+net income goal )/Contribution Margin ratio

Required sales needed = (225000+68610)/30%

Required sales needed = $ 978700

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