or the coming year, Sorkin Company anticipates a unit selling price of $126, a u

Question

or the coming year, Sorkin Company anticipates a unit selling price of $126, a unit variable cost of $63, and fixed costs of $667,800.

Required:

1. Compute the anticipated break-even sales in units.
units

2. Compute the sales (units) required to realize income from operations of $365,400.
units

3. Construct a cost-volume-profit chart, assuming maximum sales of 21,200 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.

Explanation / Answer

1 Selling Price 126 Less: variable Cost 63 Contribution 63 Break Even Point = Fixed Cost/ Contribution per unit 667800/63 10600 The Break Even will be 10600 units 2 Break Even to earn income of $ 365400 Break Even = 667800+365400/63 = 1033200/63 The Break Even to earn profit of $ 365400 is 16400 units

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