Explore BrainMass
Share

Accounting: Break-even analysis.

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

13-6 UBC Company fixed costs are $10,000 per year and variable costs are $20 per unit. Sales price is $28 per unit.
a) What is the contribution margin of the product?
Answer: $8.00
b) Calculate the breakeven point in unit sales and dollars.
Answer: Breakeven in units is 1,250
Breakeven in dollars = $35,000.00
c) What is the operating profit (loss) at:
i) 1,500 units per year?
Answer: $2,000.00 .
ii) 3,000 units per year?
Answer: $14,000.00
d) Plot a breakeven chart using the foregoing figures.

21-4 The following is a list of currency exchange rates for selected countries:
Answers
$U.S. a) $U.S. b)
Country Currency Equivalent per ? $100,000
Britain Pound 1.6428 1.4090 60,872 Pounds
Mexico Peso 0.0731 1,367,989 Pesos
Canada Dollar 0.8910 112,233 Dollars
Japan Yen 0.0107 9,345,794 Yen
Europe Euro 1.4090 70,972 Euros

21-13 Sony sells its 50-inch TV in Japan for ¥230,000. In the U.S. this same TV sells for $2,000.
What should the exchange rate be in order for purchasing point parity to exist?
Answer: 230,000 yen equals $2,000 at exchange rate $0.0087 per yen
115.0000 yen per $U.S.

© BrainMass Inc. brainmass.com October 25, 2018, 3:54 am ad1c9bdddf
https://brainmass.com/business/foreign-exchange-rates/accounting-break-even-analysis-358745

Attachments

Solution Summary

The problem set deals with topics under accounting: Break-even, contribution margin etc.

$2.19
See Also This Related BrainMass Solution

Managerial Accounting: Break Even Point Analysis

Please see attachment.

MSW:4-1
Cost-volume-profit analysis. Patton Company produces one type of sunglasses with the following costs and revenues for the year:
Total Revenues $6,000,000
Total Fixed Costs $2,000,000
Total Variable Costs $2,000,000
Total Quantity Produced and Sold 100,000 Units

Required:
a. What is the selling price per unit?
b. What is the variable cost per unit?
c. What is the contribution margin per unit?
d. What is the break-even point in units?
e. Assume an income-tax rate of 40 percent. Assuming a relevant range, what quantity of units is required for Patton Company to make an after-tax operating profit of $6,000,000 for the year?

MSW:4-2
Break-even and target profits; volume defined in sales dollars. The manager of Hsu's Carryout Express estimates operating costs for the year will total $230,000 for fixed costs.

Required:

a. Find the break-even point in sales dollars with a contribution margin ratio of 40 percent.
b. Find the break-even point in sales dollars with a contribution margin ratio of 20 percent.
c. Find the sales dollars required with a contribution margin ratio of 50 percent to generate a profit of $150,000.

MSW:4-3
CVP analysis with step costs. Techniques Company has one product: customized thumb drives with logos for various businesses. The sales price of $18 remains constant per unit regardless of volume, as does the variable cost of $10 per unit. The company is considering operating at one of the following three monthly levels of operations:

Volume Range
(production and sales) Total
Fixed Costs Increase in Fixed Costs from
Previous Level
Level 1 0-5,000 $ 30,000 --
Level 2 5,001-15,000 50,000 $20,000
Level 3 15,001-30,000 80,000 30,000

Required:

a. Calculate the break-even point(s) in units.
b. If the company can sell everything it makes, should it operate at level 1, level 2, or level 3? Support your answer.

MSW:4-4 Genia Enterprises, Inc. has the capacity to produce 12,000 units per year. Expected operations for the year are

Sales (10,000 units @ $20) $200,000
Manufacturing costs:
Variable $8 per unit
Fixed $40,000
Marketing and administrative costs:
Variable $3 per unit
Fixed $20,000
REQUIRED:
a. What is the expected level of operating profits?
b. Should the company accept a special order for 1,000 units at a selling price of $15 if variable marketing expenses associated with this special order would be $2 per unit? Calculate the incremental profits if the order is accepted.
c. Suppose the company received a special order for 3,000 units at a selling price of $15 with no variable marketing expenses. Calculate the impact on operating profits.

View Full Posting Details