Calculate Current Break-Even Point in Units Sold, Revenue

11. What is the purpose of the explanatory notes and other financial information that is presented in the annual report in conjunction with the financial statements? Describe three items that will be presented in this section of the annual report.

12. Preppy Co. makes and sells a single product. The current selling price is $30 per unit. Variable costs are $21 per unit, and fixed expenses total $90,000 per month. Sales volume for July totaled 12,000 units. Operating income is presented below:

Volume Per unit Total %
Revenue 12,000 $30.00 $360,000 100
Variable Expense 12,000 21.00 252,000 70
Contribution Margin 12,000 $ 9.00 $108,000 30
Fixed Expenses 90,000
Operating Income $ 18,000

a.Calculate the current break-even point in units sold and total revenues.
b.Management is considering the use of automated production equipment. If this were done, variable costs would drop to $15.00 per unit, but fixed expenses would increase to $100,000 per month.
1.Calculate operating income at a volume of 12,000 units per month with the new cost structure.
2.Calculate the break-even point in units with the new cost structure.
c.Do you believe management of Preppy Co. should purchase the new equipment? Explain your answer.

Solution Summary

Comments and computations to these two break-even point questions are given in Excel.

The average selling price of its finished product is $175 per unit. The variable cost for these same units is $115. Incurs fixed costs of $650,000 per year.
a. What is the break-evenpoint in units for the company?
b. What is the dollar sales volume the firm must achieve to reach the break-evenpoint?
c. What would be the f

A recent income statement of Suni Corporation reported the following data:
Sales revenue $6,800,000
Variable costs 2,800,000
Fixed costs 2,500,000
If these data are based on the sale of 20,000 units, the break-evenpoint would be?

Howard Beal co. manufactures molds for casting aluminum alloy test samples. Fixed costs amount to $20,000 per year. Variable costs for each unit manufactured are $16. Sales price per unit is $28.
a. What is the contribution margin of the product?
b. Calculate the break-evenpoint in unit sales and dollars.
c. What

Carolina Products has the following product information:
Sales price - $25.00 per unit
Variable costs - $15.00 per unit
Fixed costs (total) - $50,000
Required: Calculate the following based on the above information:
A. How many units need to be sold in order to break-even?
B. Calculate the increase in net income if an ad

Since break-even focuses on making zero profit, is it of value in determining how many units must be sold to make a targeted profit? if so, what is it. I'm struggling to understand this. Examples would be great as references.
Also, how can a change in the sales mix change the break-evenpoint?

Sammy's Salsa, Inc. sells a single product. This year, 10,000 units were sold resulting in $65,000 of sales revenue, $30,000 of variable costs, and $17,500 of fixed costs.
Find:
a) The number of units that must be sold annually to achieve $52,500 of profits
b) The break even point
c) The contribution margin.

Problem: Total Revenue (TR) =$30Q
Total Cost (TC) =$1,500 + $2Q(fixed + Variable/unit)
What is the break-even level of output?
What are the profit or losses if the firm sells 1,300 units?

1. (Supplement A) Richard Winchester, owner of Winchester Products, is considering whether to produce a new product. He has considered the operations requirements for the product as well as the market potential. Richard estimates the fixed costs per year to be $40,000 and variable cost for each unit produced to be approximately