Xcite Equipment Co. manufactures and markets a number of rope products. Manageme

Question

Xcite Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $140 per 100 yards of XT rope. PLEASE SHOW WORK

Estimate Product XT’s break-even point in terms of sales units. (1 unit = 100 yards.) (Do not round intermediate calculations.)

Contribution Margin - ?

Contribution Margin Ratio - ?

Estimate break-even point in terms of sales units (1 unit = 100 yards) (Round to nearest whole unit) - ?

Estimate break-even point in terms of sales dollars - ?

Estimate Product XT’s break-even point in terms of sales units. (1 unit = 100 yards.) (Do not round intermediate calculations.)

Contribution Margin - ?

Contribution Margin Ratio - ?

Estimate break-even point in terms of sales units (1 unit = 100 yards) (Round to nearest whole unit) - ?

Estimate break-even point in terms of sales dollars - ?

Explanation / Answer

Estimate Product XT’s break-even point in terms of sales units. (1 unit = 100 yards.) (Do not round intermediate calculations.)

Contribution Margin - ?

Contribution Margin = selling price - variable costs

Contribution Margin = 200 -140

Contribution Margin = $ 60

Contribution Margin Ratio - ?

Contribution Margin Ratio = Contribution Margin /selling price

Contribution Margin Ratio = 60/200

Contribution Margin Ratio = 30%

Estimate break-even point in terms of sales units (1 unit = 100 yards) (Round to nearest whole unit) - ?

Break-even point in terms of sales units = fixed costs/Contribution Margin

Break-even point in terms of sales units = 270000/60

Break-even point in terms of sales units = 4500 unit

Estimate break-even point in terms of sales dollars - ?

Break-even point in terms of sales dollars = fixed costs/Contribution Margin Ratio

Break-even point in terms of sales dollars = 270000/30%

Break-even point in terms of sales dollars = $ 900,000

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

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