Your Company Income Statement For the month ended January 31 Net Sales (6,000 un
ID: 2483479 • Letter: Y
Question
Your Company Income Statement For the month ended January 31 Net Sales (6,000 units @ $130/unit) $780,000 Cost of Goods Sold Materials $528,000 Labor 22,500 Factory Overhead 36,600 587,100 Gross Margin on Sales $192,900 Operating Expenses 71,000 Net Income $121,900 Costs and Expenses January Variable Fixed Direct materials 528,000 528,000 - Direct labor 22,500 22,500 - Manufacturing overhead: Variable 27,000 27,000 - Fixed 9,600 - 9,600 Operating Expenses 71,000 40,000 31,000 Total 658,100 617,500 40,600 Determine the breakeven sales volume in dollars and units. Units should be rounded up to the nearest whole value (no decimals) since partial units cannot be produced. If Your Company wishes to earn a net income of $200,000, what amount of sales (dollars) does Your Company need to achieve?
Explanation / Answer
Break even point Contribution = fixed cost no gain no loss Net sales 780000 Variable expenses Direct material 528000 Direct labour 22500 Manufacturing overhead 27000 Operating Expenses 40000 Total Variable expenses 617500 Contribution 162500 Fixed expenses Manufacturing overhead 9600 Operating Expenses 31000 Total Fixed expenses 40600 Net income 121900 Break even point in Sales Fixed Expenses/ Contribution % Contribution % Contribution/Sales Contribution % = 21% Fixed expenses 40600 Break even point in Sales 194880 $ Break even point in units Fixed expense/Contribution per unit Contribution per unit Contribution/Sales units Contribution per unit = 162500/6000 27 Break even point in units 1499 units If company need total income of $200,000 , sales can be calculated by: Contribution = Fixed Expenses +Profit Contribution/Total Fixed Expense = 40600+200000 240600 Contribution margin 21% Sales to be to gain profit of $200,000 1154880
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