help please. Thanks Chapter 19 Cost-Volume-Profit Analysis 987 PR 19-3A Obj. 3,

Question

help please.
Thanks

Chapter 19 Cost-Volume-Profit Analysis 987 PR 19-3A Obj. 3, 4 units For the coming year, Cleves Company anticipates a unit selling price of $100, a unit variable Break-even sales and cost-volume-profit chart cost of $60, and fixed costs of $480,000. Instructions 1. Compute the anticipated break-even sales (units). 2. Compute the sales (units) required to realize a target profit of $240,0o0. relevant range 4. Determine the probable income (loss) from operations if sales total 16,000 units.

Explanation / Answer

Answer

1. Compute the anticipated break-even sales in units:

= Fixed cost/contribution per unit

= $480000/$40

=12000 units

2.

The sales (units) required to realize a target profit of $240000:

= Fixed cost + required income / Cotribution per unit

= $480000 + $240000 / $40

= 18000 units

3.

Break even sales in $ =BEP in units * sales price per unit

=12000 units*$100

=1200000

Hence 1200000 is break even sales, sales ablove 1200000 would is profit and below $1200000 would result in loss.

4.

The probable income (loss) from operations if sales total 16,000 units:

Sales level Result 1200000 Break even 1000000 Loss 800000 Loss 400000 Loss 200000 Loss

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