Question

Sequoah Company sells its product for $58 and has variable costs of $30 per unit. The...

Sequoah Company sells its product for $58 and has variable costs of $30 per unit. The total fixed costs are $40,000. What will be the effect on the breakeven point in units if variable costs increase by $6 due to an increase in the cost of direct​ materials?

Homework Answers

Answer #1

Break Evn Points (Units) =    Fixed Costs   

Sales price per unit - Varaible cost per unit

=    $40,000

$58 -$30

= $40,000/28

=Approx 1429 Units

Now if Variable cost increase by $6 Revise Break even is as follow

= $ 40,000   

$58 - ($30 + $6)

= $40,000

$58 - $36

= $40,000   

  $22

= Approx 1818 Units

So because of Increse in variable cost by $6 break even point increase from 1429 units to 1818 units.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Gandolph Company manufactures a product with the following costs per unit at the expected production of...
Gandolph Company manufactures a product with the following costs per unit at the expected production of 30,000 units: Direct materials $ 4 Direct labor 12 Variable manufacturing overhead 6 Fixed manufacturing overhead 8 The company has the capacity to produce 40,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 a unit for 2,000 units. If the firm is at capacity and the special order is accepted, the effect on operating income would be a....
Harmony Company sells a product for $50 per unit. Variable costs per unit are $30, and...
Harmony Company sells a product for $50 per unit. Variable costs per unit are $30, and monthly fixed costs are $ 150,000. C. Assume they achieve the level of sales required in part what is the margin of safety in sales dollars? Break Even Point in Units: 7500 Level of sales from part b: $12500
NYC Inc. sells its product for $30 per unit and variable costs are $16 per unit....
NYC Inc. sells its product for $30 per unit and variable costs are $16 per unit. Its fixed costs are $122,400. Calculate the required sales in units to achieve its target operating income of 11% of total costs. (Round answer to 0 decimal places, e.g. 125.) (it is very important that this is correct) thank you!
Wardley Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs...
Wardley Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16,000. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs. Which of the following is true about the break-even point in units?         It will increase.         It cannot be determined from the information provided.         It will remain unchanged....
Emeka Company has provided the following​ information: Sales price per unit $42 Variable cost per unit...
Emeka Company has provided the following​ information: Sales price per unit $42 Variable cost per unit 16 Fixed costs per month $18,000 Calculate the contribution margin per unit. A.$58 B. $42 C. $16 D.$26 Tentacle Television Antenna Company provided the following manufacturing costs for the month of June. Direct labor cost $132,000 Direct materials cost 84,000 Equipment depreciation ​(straight−​line) 23,000 Factory insurance 11,000 Factory​ manager's salary 11,200 ​Janitor's salary 5,000 Packaging costs 19,000 Property taxes 16,000 From the above​ information,...
A product sells for $170 per unit, and its variable costs per unit are $100. The...
A product sells for $170 per unit, and its variable costs per unit are $100. The fixed costs are $540,000. If the firm wants to earn $40,000 after tax income (assume a 15% tax rate), how many units must be sold? After, prove the amount of units by plugging it back in to find the $40,000 (pre and post 15% tax rate).
Lights Manufacturing produces a single product that sells for $ 150$150. Variable costs per unit equal...
Lights Manufacturing produces a single product that sells for $ 150$150. Variable costs per unit equal $ 50$50. The company expects total fixed costs to be $ 80 comma 000$80,000 for the next month at the projected sales level of 1 comma 0001,000 units. What is the current breakeven point in terms of number of​ units?
BM Company sells two products, X and Y. Product X sells for $20 per unit with...
BM Company sells two products, X and Y. Product X sells for $20 per unit with variable costs of $11 per unit. Product Y sells for $30 per unit with variable costs of $16 per unit. During this period, BM sold 16,000 units of X and 4,000 units of Y, making Total Revenue of $440,000, and after subtracting variable cost got Total Contribution Margin of $200,000, and after subtracting Total Fixed Cost of $110,000, earned Operating Profit of $90,000. When...
1. Wang Co. manufactures and sells a single product that sells for $540 per unit; variable...
1. Wang Co. manufactures and sells a single product that sells for $540 per unit; variable costs are $324 per unit. Annual fixed costs are $836,000. Current sales volume is $4,290,000. Compute the contribution margin per unit. 2. A firm expects to sell 24,800 units of its product at $10.80 per unit and to incur variable costs per unit of $5.80. Total fixed costs are $68,000. The total contribution margin is: 3. McCoy Brothers manufactures and sells two products, A...
A company sells Product X for $30 per unit. The Direct Material Cost, Direct labor cost,...
A company sells Product X for $30 per unit. The Direct Material Cost, Direct labor cost, and Variable MFO costs total $21 per unit. Fixed costs to product the product are $135,000. How many units of Product X must the company sell in order to break even? What is the contribution margin ratio for product X? How many units of Product X must be sold in order for the company to earn a $50,000 profit? If the company was selling...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT