Question

Break-Even Sales and Sales to Realize Income from Operations

For the current year ending October 31, Yentling Company expects fixed costs of $701,800, a unit variable cost of $58, and a unit selling price of $87.

a. Compute the anticipated break-even sales (units).
units

b. Compute the sales (units) required to realize income from operations of $162,400.
units

Answer 1

Answer-a)- The anticipated break-even sales (units) = 24200 units.

Explanation- Break-even sales (units) = Fixed costs/ Contribution margin per unit

= $701800/$29 per unit

= 24200 units

Where- Contribution margin per unit= Selling price per unit- Variable cost per unit

= $87 per unit- $58 per unit

= $29 per unit

b)- The sales (units) required to realize income from operations of $162400 = 29800 units.

Explanation- Sales units to earn desired profit of $162400 = ($701800+$162400)/$29 per unit

= $864200/$29 per unit

= 29800 units