Break-Even Sales and Cost-Volume-Profit Chart For the coming year, Sorkin Compan

Question

Break-Even Sales and Cost-Volume-Profit Chart

For the coming year, Sorkin Company anticipates a unit selling price of $114, a unit variable cost of $57, and fixed costs of $359,100.

Required:

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

2. Compute the sales (units) required to realize income from operations of $182,400.
units

3. Construct a cost-volume-profit chart, assuming maximum sales of 12,600 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.

4. Determine the probable income (loss) from operations if sales total 10,100 units. If required, use the minus sign to indicate a loss.
$ Income

Explanation / Answer

1. Break even sales in units = Fixed costs / contrinbution margin per unit

= 359100 / 114 - 57

= 6300 units.

2. Sales units = 541500 (359100 + 182400) / 114 - 57 = 9500 units

3. Sales [ 12600*114] 1436400

   less: variable cost [12600*57] (718200)

   Contribution margin 718200

   less: fixed expenses (359100)

   Operating income 359100

the above table indicates 718200 break even

4. Sales [ 10100 * 114] 1151400

less: variable cost (575700)

   Contribution margin 575700

less: fixed expenses (359100)

Operating income 216600.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.