Question 6 (10 points) During FY 2016, Alpha Company sold 100 units for total sa

Question

Question 6 (10 points) During FY 2016, Alpha Company sold 100 units for total sales of $10,000. Manufacturing costs consisted of direct labor S1,500, direct materials $1,400, variable factory overhead $1,000, and fixed factory overhead $500. Alpha Company does not maintain any inventories. Total cost of goods sold was S4,400. Selling expenses were 600 variable and $1,000 fixed. Administrative expenses were $500 variable and $1,000 fixed. Net Income was S2,500. Use this information to determine the following using CVP Analysis: (Round all final answers to nearest dollar or whole unit number) 1. Breakeven Point in total sales dollars 2. Breakeven Point in total units 3. Breakeven Point in total sales dollars if the fixed factory overhead increased by $1,500 4. Breakeven Point in total units if the fixed factory overhead increased by $1,500 5. Net Income if sales units increased by 35%

Explanation / Answer

1 Break even point of Sales = Fixed cost /Contribution margin ratio Contribution margin ratio Amount in $ Amount in $ Sales 10,000 less:Variable expenses Direct labour 1500 Direct materials 1400 variable factory over head 1000 variable selling exp 600 variable Admin Expenses 500 5000 Contribution margin 5,000 Contribution margin ratio = Contribution/ sales =5000/10,000 *0.50=50% Fixed Expenses Amount in $ Factory over head 500 Sellingg expenses 1000 Admin Expenses 1000 2500 Break even sales = Fixed costs / Contribution marin ratio =$2500/50% =$5000 (2) Break even Point in Total unit = Break even Sales / sale price per unit =$5000/$100 =50 Units (3) Break even Point in total sales dollars if the fixed factry over heads incresed by $1500 Total fixed expenses =$2500+$1500 =$4000 Break even sales in Dollars =fixed expenses / Contribution margin ratio =$4000/50% =$8000 -4 (4) Break even Point in total sales in units if the fixed factry over heads incresed by $1500 Contribution margin per unit =$5000/100 Units =$50 Break even point in units =Fixed cost / Contribution per unit =$4000/$50=80 units (5) Net income if sales units incresed by 35% new sales units =100 units *1.35 =135 units Contribution from Total 135 units =135*$50 =$6750 Net Income if fixed expenses are $2500 =Contribution - fixed Expenses =$6750-$2500=$4250 Net Income if fixed expenses are $4000 =Contribution - fixed Expenses =$6750-$4000=$2750

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

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