In 2015, X Company had the following selling price and per-unit variable cost in
ID: 2424751 • Letter: I
Question
In 2015, X Company had the following selling price and per-unit variable cost information: Selling price $182.40 Direct materials 37.00 Direct labor 12.30 Variable overhead 35.80 Variable selling and administrative 11.20 In 2015, fixed overhead costs were $386,000, and fixed selling and administrative costs were $264,000. In 2016, there are only two expected changes. Direct material costs are expected to decrease by 10% per unit, and fixed selling and administrative costs are expected to increase by $15,000. What must unit sales be in order for X Company to break even in 2016?
Explanation / Answer
Selling price $182.40
less:Variable cost
Direct materials (37@90%) 33.30
Direct lanro 12.300
Variable overhead 35.80
Variable selling and administrative expense 11.20
Contribution per unit $89.80
Fixed overhead costs $386,000
Add:Fixed selling (264,000 +15,000) 279,000
Total fixed cost $665,000
BEP(units) = Fixed cost / Contribution per unit
= 665,000/89.80
=7,405 units
Selling price $182.40
less:Variable cost
Direct materials (37@90%) 33.30
Direct lanro 12.300
Variable overhead 35.80
Variable selling and administrative expense 11.20
Contribution per unit $89.80
Fixed overhead costs $386,000
Add:Fixed selling (264,000 +15,000) 279,000
Total fixed cost $665,000
BEP(units) = Fixed cost / Contribution per unit
= 665,000/89.80
=7,405 units
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.