The controller of Adventis Hospital has determined the following estimates for a

Question

The controller of Adventis Hospital has determined the following estimates for a new product: Sales price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . $175 Variable manufacturing cost per unit . . . . . . . . . . . . . . $90 Variable sales cost per unit . . . . . . . . . . . . . . . . . . . . . . $15 Fixed manufacturing costs . . . . . . . . . . . . . . . . . $310,000 Fixed sales costs . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000 Required: 1. Compute the break-even point in units and sales revenue. Prepare an income statement to prove your answer. 2. Compute the number of units to be produced and sold to generate a before-tax profit of $140,000. Prepare an income statement to prove your answer. 3. Compute the number of units to be produced and sold to generate a before-tax profit of $10,000 The controller of Adventis Hospital has determined the following estimates for a new product: Sales price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . $175 Variable manufacturing cost per unit . . . . . . . . . . . . . . $90 Variable sales cost per unit . . . . . . . . . . . . . . . . . . . . . . $15 Fixed manufacturing costs . . . . . . . . . . . . . . . . . $310,000 Fixed sales costs . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000 Required: 1. Compute the break-even point in units and sales revenue. Prepare an income statement to prove your answer. 2. Compute the number of units to be produced and sold to generate a before-tax profit of $140,000. Prepare an income statement to prove your answer. 3. Compute the number of units to be produced and sold to generate a before-tax profit of $10,000

Explanation / Answer

Statement showing computations Particulars Amount Sales Price per unit                         175.00 Variable Costs: Variable Manufacturing cost per unit                            90.00 Variable sales cost per unit                              15.00 Total Variable costs                         105.00 Contribution per unit = 175 - 105                            70.00 1) Fixed Costs: Fixed manufacturing costs                 310,000.00 Fixed sales costs                   40,000.00 Total fixed Costs                 350,000.00 BEP in Units = 350,000/70                      5,000.00 BEP in $ = 5,000*175                 875,000.00 2) Total fixed Costs                 350,000.00 Desired profit                 140,000.00 Desired Contribution = 350,000 + 140,000                 490,000.00 BEP in Units = 490,000/70                      7,000.00 BEP in $ = 7,000*175             1,225,000.00 3) Total fixed Costs                 350,000.00 Desired profit                   10,000.00 Desired Contribution = 350,000 + 10,000                 360,000.00 BEP in Units = 360,000/70                      5,142.86 BEP in $ = 5,142.86*175                 900,000.00 PROOF Statement showing computations Particulars 1) = 5,000 Units 2) = 7,000 units 3) =5,142.86 units Sales Price                   875,000.00     1,225,000.00                  900,000.50 Variable Costs: Variable Manufacturing cost                   450,000.00         630,000.00                  462,857.40 Variable sales cost                     75,000.00         105,000.00                     77,142.90 Total Variable costs                 525,000.00         735,000.00                  540,000.30 Contribution = Sales - Variable Costs                 350,000.00         490,000.00                  360,000.20 Fixed Costs: Fixed manufacturing costs                 310,000.00         310,000.00                  310,000.00 Fixed sales costs                   40,000.00           40,000.00                     40,000.00 Total fixed Costs                 350,000.00         350,000.00                  350,000.00 Income = Contribution - FC                                   -           140,000.00                     10,000.20

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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