Shift Alt 4. Norton, Inc. has the following information available for September
ID: 2590063 • Letter: S
Question
Shift Alt 4. Norton, Inc. has the following information available for September 2016. ne consoles 280 Unit selling price of video game consoles 400 Unit variable costs Total fixed costs Units sold $48,000 500 Instructions (a) Prepare a CVP income statement that shows both total and per unit amounts. (b) Compute Norton's breakeven in units using the l) mathematical equation 2) contribution margin technique. (c) Compute Norton's breakeven point in sales dollars using the contribution margin techniqueExplanation / Answer
Answer-a)-
b)-Breakeven units :-
Using equation method:-
px = vx + FC + Profit
Where,
p= price per unit,
x = number of units,
v= variable cost per unit
FC = Total fixed cost.
At break-even point the profit is zero therefore the CVP formula is simplified to:
px = vx + FC
Solving the above equation for x which equals break-even point in sales units:-
Break-even Sales units=x=FC/p-v
Break-even Sales units=x =$48000/$400 per unit-$280 per unit
=$48000/$120 per unit =400 units
Using formula method:-
Break-even point in unit sales = Fixed cost/Contribution per unit
=48000/$400 per unit-$280 per unit
=$48000/$120 per unit =400 units
c)-Contributon margin method:-
Break even point sales in dollars = Fixed cost/Contribution margin ratio
=48000/30% =$160000
Where:-
Contribution margin ratio= Contribution margin /Total sale value*100
=$60000/$200000*100
= 30%
Norton Inc. CVP Income Statement Particulars Per unit $ Amount $ Sales value 400 $400 per unit*500 units = 200000 Less:- Variable cost 280 $280 per unit*500 units = 140000 Contribution 120 60000 Less:- Fixed cost 96 48000 Net opreating income 24 12000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.