Explore BrainMass
Share

Breakeven point in dollars and units

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

Carrier Company produces a part used in the small appliance industry. The company produces and sells 120,000 parts per year. The selling price is $4 per part; variable costs are $2.50 per part; fixed costs are $50,000 per year.

What is the breakeven point in dollars and units?

After conducting research, the president feels that a 5% reduction in the partâ??s selling price will result in a 20% increase in the number of parts sold. Prepare a CVP statement reflecting these changes.

© BrainMass Inc. brainmass.com October 17, 2018, 1:48 am ad1c9bdddf
https://brainmass.com/economics/finance/breakeven-point-dollars-units-353190

Solution Summary

The solution explains how to calculate the breakeven point in dollars and units and prepare a CVP statement

$2.19
Similar Posting

Patroit Company: breakeven point in dollar sales and composite units

See pdf file attached

Patroit Company: breakeven point in dollar sales and composite units

Patriot Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $20; white,
$35; and blue, $65. The per unit variable costs to manufacture and sell these products are red, $12; white, $22;
and blue, $50. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all
three products are $250,000. One type of raw material has been used to manufacture all three products. The
company has developed a new material of equal quality for less cost. The new material would reduce variable
costs per unit as follows: red, by $6; white, by $12; and blue, by $10. However, the new material requires new
equipment, which will increase annual fixed costs by $50,000.
Requirement 1:
If the company continues to use the old material, determine its break-even point in both sales units and sales
dollars of each individual product. (Omit the "$" sign in your response. Round product units up to the next
whole number and use for further calculations.)
Break-Even Points Sales Units Sales Dollars
Red at break-even $
White at break-even $
Blue at break-even $
Requirement 2:
If the company uses the new material, determine its new break-even point in both sales units and sales dollars of
each individual product. (Omit the "$" sign in your response. Round product units to the nearest whole
number and use for further calculations.)
Break-Even Points Sales Units Sales Dollars
Red at break-even $
White at break-even $
Blue at break-even $

View Full Posting Details