Question

Break-even Sales and cost-Volume-Profit Chart For the coming year, Claves Company anticipates a unit selling price of $118. Required 1. Compute the anticipated break even sales (unit). unit variable cost of $59. and fed costs of $407.100 2. Compute the sales (unit) wired to r e target profit of $17 3. Construct a cost volume-profit chart assuming maximum sales of 13.00 units within the relevant range from your chart indicate whether each of the following sales levels would produce profit, a loss, or breate even $1.144,600 $1,014,000 $814,200 $623.600 $483.000 loss) from operations les total 11.000 units Frequired the m a in to ate

Answer 1

1. Contribution margin per unit = Selling price per unit - Variable costs per unit

= $118 - $59

= $59

Break-even sales in units = Fixed costs / Contribution margin per unit

= $407,100 / $59

= 6,900

2. Sales units required = (Fixed costs + Target profit) / Contribution margin per unit

= ($407,100 + $177,000) / $59

= 9,900

3. Break-even sales = Break-even units * $118

= 6,900 * $118

= $814,200

Any sales above $814,200 would lead to profit and below $814,200 would lead to loss

$1,144,600	Profit
$1,014,800	Profit
$814,200	Break-even
$613,600	Loss
$483,800	Loss

4. Income(loss) = Sales - Variable costs - Fixed costs

= (11,000 * $118) - (11,000 * $59) - $407,100

= $241,900