Ur Ivanhoe Manufacturing Ltd. has provided you with the following CVP income statement:Sales (5,500 units)Variable costsContribution marginFixed costsOperating income$1,100,000726,000Break-even point374.000318,920$55.080$200 per unit132 per unit$68 per unitManagement is considering the following course of action to increase operating income: reduce the selling price by 20%, with nochanges to unit variable costs or fixed costs. Management feels that this change will increase unit sales by 30%.Calculate the break-even point in units and sales dollars with no change in sales. (Round contribution margin ratio to 5 decimalplaces, e.g. 15.22456%. Round units to 0 decimal places, e.g. 5,275 and dollar amount to 2 decimal places, e.g. 15.25.)In units$In dollars

The breakeven point is the point where a company's total cost is equal to the total revenue. Thus, a…

Answered: Calculate the break-even point in units…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

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Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A S100,000 76,000 24,000 9,000 6.000 $9.000 Product B $90,000 48,000 42,000 18,000 9,000 $15.000 Product C $44,000 35,000 9,000 3,000 7.700 S(1,700) increase by $18,000 O increase by ST15,000 () increase by $36,000 increase by $24,000 increase by $42,000 )
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Consider the following cost and pricing data of ABC Corp. on its Product X:Price: P120.00.per unitProfit Contribution: P90.00Proposed additional Cost: P3 per unit (for quality improvement)Current Profits: P2.4 millionSales: 100,000 units. A. Assuming that average variable costs are constant at all output levels, findABC Corp.’s total cost function before the proposed change.B. Calculate the total cost function if the quality improvement is implemented. UNANSWERED SUB-PARTSC. Calculate ABC Corp.’s break-even output before and after the change, assuming it cannot increase its price.D. Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million
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Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Product B Product C Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76,000 24,000 9,000 6,000 $9.000 $90,000 48,000 42,000 18,000 9,000 $15.000 $44,000 35,000 9,000 3,000 7,700 S(1,700) increase by $42,000 O increase by $18,000 increase by $36,000 increase by $15,000 ) increase by $24,000
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Assume the following data for Mother Earth LLC:   Unit Selling Price $ 230.00 Unit Variable Cost $ 145.00 Fixed Cost $ 62,500.00 Target Profit $ 120,000.00     A) Calculate the unit contribution margin ANS: $ B) How many units must be sold to attain an operating income (Target Profit) of $120,000? ANS:UNITS   Break Even Point Units   C) Calculate the number of units that must be sold to break-even. Round to the nearest unit. ANS: UNITS   Break Even Point Dollar's   D) Calculate how much money in Sales must be generated to break-even. ANS: $
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Calculate the break-even point in units and sales dollars with no change in sales. (Round contribution margin ratio to 5 decimal places, e.g. 15.22456%. Round units to 0 decimal places, e.g. 5,275 and dollar amount to 2 decimal places, e.g. 15.25.)