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Showing posts with label Break-even point. Show all posts
Showing posts with label Break-even point. Show all posts
Wednesday, 9 July 2014

We are evaluating a project that costs $690,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 71,000 units per year. Price per unit is $75, variable cost per unit is $50, and fixed costs are $790,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project.

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We are evaluating a project that costs $690,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-li...

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $18.50 per unit, and the variable labor cost is $7.00 per unit.

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Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $18.50 per unit, and the variable labor cost is ...
Thursday, 1 May 2014

Deavila Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product Q91I Product J53Z Sales $ 15,800 $ 11,800 Variable expenses $ 5,800 $ 5,060 ________________________________________ Fixed expenses for the entire company were $13,930. Required: a. Determine the overall contribution margin ratio for the company. (Round your answer to 2 decimal places.) Contribution margin ratio b. Determine the overall break-even point in total sales dollars for the company. (Round your intermediate calculation to 2 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Break-even point $ c. If the sales mix shifts toward Product Q91I with no change in total sales, what will happen to the break-even point for the company? It will result in a decrease in the company's overall break-even point. Explanation: a. Product Q91I Product J53Z Total Sales $ 15,800 $ 11,800 $ 27,600 Variable expenses 5,800 5,060 10,860 ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ Contribution margin $ 10,000 $ 6,740 16,740 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Fixed expenses 13,930 ________________________________________ ________________________________________ Net operating income $ 2,810 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Overall CM ratio = Total contribution margin/Total sales = $16,740/$27,600 = 0.61 b. Break-even point in total sales dollars = Fixed expenses/Overall CM ratio = $13,930/0.61 = $22,836 c. Product Q91I Product J53Z Sales (a) $ 15,800 $ 11,800 Contribution margin (b) $ 10,000 $ 6,740 CM ratio (b)÷(a) 0.633 0.571 ________________________________________ Since Product Q91I's CM ratio is greater than Product J53Z's, a shift in the sales mix toward Product Q91I will result in a decrease in the company's overall break-even point.

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Deavila Inc. produces and sells two products. Data concerning those products for the most recent month appear below: ...
Tuesday, 31 July 2012

Tyrene Products manufactures recreational equipment. One of the company’s products, a

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Problem 5-29 Various CVP Questions: Break-Even Point; Cost Structure; Target Sales [LO1, LO3, LO4, LO5, LO6, LO8] Tyrene Products ma...