The following information was extracted from the accounting records of MVP Corporation: Selling price per unit...
The following information was extracted from the accounting records of MVP Corporation:
|
Selling price per unit |
$ 60 |
|
Variable cost per unit |
20 |
|
Total fixed costs |
480,000 |
Required:
|
A. |
What is MVP's break-even point in units? |
|
B. |
How many units must be sold to earn operating income of $80,000? |
|
C. |
What is MVP's break-even point in units if the selling price increases by 20% and the variable costs decrease by 20%? |
|
D. |
Using the information in part C, what sales level in dollars is needed to earn an operating income of $80,000? |
Homework Answers
| A) | BEP(units) | ||||
| Fixed cost/contribution margin per unit | |||||
| 480,000/40 | |||||
| 12000 | units | ||||
| B) | To earn target profit | ||||
| (480,000+80,000)/40 | |||||
| 14000 | units | ||||
| C) | Selling price | 72 | |||
| Variable cost | 16 | ||||
| New contribution margin | 56 | ||||
| units | |||||
| 480,000/56 | |||||
| 8571 | units | ||||
| D) | (480000+80000)/77.7778% | ||||
| 720000 | |||||
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