1- Caluculate the breakeven points in units 2- Calcualte the breakeven point in
ID: 2604495 • Letter: 1
Question
1- Caluculate the breakeven points in units
2- Calcualte the breakeven point in sales dollars
3- Calculate the margin of safety in sales dollars
Sales per unit
$55
Manufacturing costs:
Fixed Costs:
Variable Costs:
Direct materials
$9
Direct labor
7
Variable manufacturing overhead
4
Fixed manufacturing overhead
$90,000
Period expenses:
Variable selling & administrative expenses
5
Fixed selling & administrative expenses
24,000
Totals:
$114,000
$25
Units sold:
57,000 units
Sales per unit
$55
Manufacturing costs:
Fixed Costs:
Variable Costs:
Direct materials
$9
Direct labor
7
Variable manufacturing overhead
4
Fixed manufacturing overhead
$90,000
Period expenses:
Variable selling & administrative expenses
5
Fixed selling & administrative expenses
24,000
Totals:
$114,000
$25
Units sold:
57,000 units
Explanation / Answer
Answer to 1
Break Even In Units = Total Fixed Cost / Contribution Per Unit
= 114000 / 30
= 3800 Units
Working Note:
Contribution Per Unit = Sales Price - Variable Cost
= 55 - 25
= 30
Answer to 2
Break Even In dollar Sales = Total Fixed Cost / Contribution margin Ratio
= 114000 / 0.5455
= $209000
Working Note
Contribution Margin Ratio = Contribution Margin / Sales Price
= 30 / 55
= 54.55%
Answer to 3
Margin of Safety in Dollar Sales = Total Sales - Break Even Sales
= 57000 x 55 - 209000
= 3135000 - 209000
= $2926000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.