2. Compute th e sales (units) required to realize a target profit of s Construct
ID: 342451 • Letter: 2
Question
2. Compute th e sales (units) required to realize a target profit of s Construct a cost-volu relevant range. he-profit chart, assuming maximum sales of 20,000 units within the Determine the probable income loss) from operations if sales total 1o PR 19-4A 00 units Last year, Hever Inc. Break-even sales and cost-volume-profit chart Obj. 3, 4 nc.had sales of $500.000, based on a unit selling price of $250. The variable 7S, and fixed costs were $75,000. The maximum sales within Hever Inc cost per unit was $175 ge 2,500 units. Hever Inc. is considering a proposal to spend an additional $33,750 on billboard advertising during the current year utilize unused capacity iatructions i. C in an attempt to increase sales and onstruct a cost-volume-profit chart indicating the break-even sales for last year. Verify your answer, using the break-even equation 2. Using the cost-volume-profit chart prepared in part (1), determine the income from operations for last year and (B) the maximum income from operations that could have been realized during the year. Verify your answers using the mathematical approach to cost-volume-profit analysis. Construct a cost-volume-profit chart indicating the break-even sales for the current year, assuming that a noncancellable contract is signed for the additional billboard advertising No changes are expected in the unit selling price or other costs. Verify your answer, using the break-even equation. operations if sales total 2,000 units and (B) the maximum income from operations that could be realized during the year. Verify your answers using the mathematical approach to 2 Using the cost-volume-profit chart prepared in part (3), determine (A) the income from cost-volume-profit analysis Obj. 5 PR 19-5A Sales mix and break-even sales Data related to the expected sales of laptops and tablets for Tech Products Inc. for the currerntExplanation / Answer
1) CVP chart : Volume Sales @ 250 Variable cost @ 175 Contribution @ (250-175=75) Fixed cost Profit (loss) 500 125000 87500 37500 75000 -37500 1000 250000 175000 75000 75000 0 1500 375000 262500 112500 75000 37500 2000 500000 350000 150000 75000 75000 2500 625000 437500 187500 75000 112500 BEP (units) = Fixed Cost / Contribution = 75000 / (250-175) = 1000 units 2) A. Income from operations for last year = $75000 B. Maximum income from operations = 112500 (at 2500 units) 3) CVP chart : Volume Sales @ 250 Variable cost @ 175 Contribution @ (250-175=75) Fixed cost Profit (loss) 500 125000 87500 37500 108750 -71250 1000 250000 175000 75000 108750 -33750 1450 362500 253750 108750 108750 0 1500 375000 262500 112500 108750 3750 2000 500000 350000 150000 108750 41250 2500 625000 437500 187500 108750 78750 BEP (units) = Fixed Cost / Contribution = 108750 / (250-175) = 1450 units 4) A. Income from operations for 2000 units = $41250 B. Maximum income from operations = $78750 (at 2500 units)
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