Jasper Company has variable costs per unit of $20, fixed costs of $300,000, and

Question

Jasper Company has variable costs per unit of $20, fixed costs of $300,000, and a break-even point of 60,000 units. What will be the new break-even point in units if variable costs decrease by $3 per unit and fixed costs increase by $100,000?

93,333 units

33,333 units

50,000 units

200,000 units

At the break-even point:

Sales would be equal to total costs.

Contribution margin would be equal to total fixed costs.

Sales would be equal to fixed costs.

Both sales would be equal to total costs and contribution margin would be equal to total fixed costs are correct.

Which of the following statements about a cost-volume-profit graph is correct?

A cost-volume-profit graph is prepared with activity (number of units) on the vertical axis.

The intersection of the total sales line and the total cost line represents the break-even point.

The area above the break-even point represents the area of loss.

The total cost line intersects the vertical axis at the dollar amount of total variable costs.

Joseph Company has variable costs of $80 per unit, total fixed costs of $200,000, and a break-even point of 5,000 units. If the variable cost per unit decreases by $8, how many units must Joseph Company sell to break-even?

2,778 units

2,500 units

6,250 units

4,167 units

Explanation / Answer

VC PU 20 Fixed Costs 300000 First we need to calculate Sales Price: BEP 60000 Fixed Cost/(Sales Price-VC) 60000 300000/(SP-20) 60000 300000 60000SP-1200000 1500000 60000SP SP 25.00 1 Existing Status: Revised: SP 25.00 SP 25.00 Less: VC PU 20.00 Less: VC PU 17.00 (20-3) Contribution PU 5.00 Contribution PU 8.00 Fixed Costs 300000 Fixed Costs 400000 (3Lac+1Lac) BEP 60000 BEP 50000 (300000/5) (400000/8) Answer is 50000/- 2 AT Break Even Point: Contribution Margin would be equal to Total Fixed Costs AT BEP Company is at No Profit No Loss Situation 3 The Intersection of the total sales line and the total cost line represents the break even point Where Cost=Sales; No profit or Loss It is the BEP 4 VC PU 80 Fixed Costs 200000 First we need to calculate Sales Price: BEP 5000 Fixed Cost/(Sales Price-VC) 5000 200000/(SP-80) 5000 200000 5000SP-400000 600000 5000SP SP 120.00 Existing Status: Revised: SP 120.00 SP 120.00 Less: VC PU 80.00 Less: VC PU 72.00 (80-8) Contribution PU 40.00 Contribution PU 48.00 Fixed Costs 200000 Fixed Costs 200000 BEP 5000 BEP 4166.666667 (200000/40) (200000/48) Answer is 4167/-

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