Exercise 19-7 Breakeven Analysis Meadowlends Design produces head covers for gol

Question

Exercise 19-7 Breakeven Analysis Meadowlends Design produces head covers for golf clubs. The company expects to generate a profit next yeer. it antkipates fixed manufacturing costs of $200,500 and fixed general and administrativ expects to manufacturing and selling costs per set of head covers will be 58 and $12, respectively. Each set will sell for $30 1. Compute the breakeven point in sales units 2. Compute the breakeven point in sales doliars. 3. If the selling price is increased to $34 per unit and fixed general and administrative expenses are cut to $37,500, what will the new breakeven point be in unts? Select the graph that ilustrates the breakeven point computed in 3 Breakeven Graph Breakeven Graph

Explanation / Answer

Req 1. Total Fixed cost: 200,500+80,000 = $ 280,500 Variable cost per unit; 8+12 = 20.00 per unit Selling price per unit: $30.00 per unit Contribution margin per unit: 30-20 = $10.00 per unit Break even units:Fixed cost / Contribution per unit = 280500 / 10 = 28050 units Req 2: CM ratio = Contribution/ Sales *100 = 10/30*100 = 33.33% Break even sales in $= Fixed cost/ CM ratio = 280500/33.33% = 841,500 Req 3: Revised selling price: $ 34 Revised fixed costt= 200500+37500 = 238000 Revised contribution per unit = 34- 20 = 14 pe unit Break even units = Revised Fixed cost / Contribution per unit = 238000/14 = 17000 units Req 4: Graph 3.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.