Viejol Corporation has collected the following information after its first year
ID: 2446428 • Letter: V
Question
Viejol Corporation has collected the following information after its first year of sales. Sales were $2,000,000 on 100,000 units, selling expenses $230,000 (40% variable and 60% fixed), direct materials $490,000, direct labor $611,800, administrative expenses $278,000 (20% variable and 80% fixed), and manufacturing overhead $358,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.
Compute the break-even point in units and sales dollars for the current year. (Round intermediate calculations to 2 decimal places e.g. 2.25 and final answers to 0 decimal places, e.g. 1,225.)
Break-even point in units units Break-even point in dollars$
Explanation / Answer
Statement showing computations Particulars Current Year Next Year No of units 100,000.00 110,000.00 Sales 2,000,000.00 2,200,000.00 Variable Costs: Selling Exp = 230000*.40 92,000.00 101,200.00 Direct Materials 490,000.00 539,000.00 Direct Labour 611,800.00 672,980.00 Admin Exp = 278000*.20 55,600.00 61,160.00 Manu O/H = 358000*.70 250,600.00 275,660.00 Total Variable costs 1,500,000.00 1,650,000.00 Contribution=Sales-VC 500,000.00 550,000.00 Fixed Costs: Selling Exp = 230000*.60 138,000.00 138,000.00 Admin Exp = 278000*.8 222,400.00 222,400.00 Manu O/H = 358000*.30 107,400.00 107,400.00 Total Fixed Costs 467,800.00 467,800.00 Income= Cont - FC 32,200.00 82,200.00 Contribution Margin ratio = Cont/Sales 25% 25% BEP in $ = Fixed Costs/PV Ratio or cont Margin ratio 1,871,200.00 1,871,200.00 SP per unit = Sales/Unit 20.00 20.00 BEP in units= BEPin $/SP per unit 93,560.00 93,560.00
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