Break-Even Sales and Cost-Volume-Profit Chart For the coming year, Sorkin Compan
ID: 2485287 • Letter: B
Question
Break-Even Sales and Cost-Volume-Profit Chart For the coming year, Sorkin Company anticipates a unit selling price of $126, a unit variable cost of $63, and fixed costs of $384,300.
Required:
1. Compute the anticipated break-even sales in units.
units
2. Compute the sales (units) required to realize income from operations of $163,800.
units
3. Construct a cost-volume-profit chart, assuming maximum sales of 12,200 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.
4. Determine the probable income (loss) from operations if sales total 9,800 units. If required, use the minus sign to indicate a loss.
$
Explanation / Answer
Selling Price $126 Less: VC $63 Contribution $63 Fixed Cost $384,300 A BEP (units)= Fixed Cost/contribution p.u = $384300/$63 = 6100 units B units to realize income of Rs. $163800 Required unite = [Fixed assets+ estimated income]/contribution p.u =[384300+163800]/$63 =$548100/$63p.u =8700 units C Sales Value $1,071,000 $957,600 $768,600 $579,600 $466,200 Units sold[sales value/$126] 8500 7600 6100 4600 3700 Sales Value 1,071,000 957,600 768,600 579,600 466,200 Less: Variable cost[ no of units*$63] 535,500 478,800 384,300 289,800 233,100 Contribution 535,500 478,800 384,300 289,800 233,100 Less: Fixed Cost 384,300 384,300 384,300 384,300 384,300 Profit 151,200 94,500 - (94,500) (151,200) D Statement of Income/Loss Units sold 9800 Sales Value[ 9800units*$126] 1,234,800 Less: Variable cost[ no of units*$63] 617,400 Contribution 617,400 Less: Fixed Cost 384,300 Profit 233,100
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