Question

Break-even sales and sales to realize operating income For the current year ended March 31, Cosgrove Company expects fixed costs of $453,600, a unit variable cost of $56, and a unit selling price of $83. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize operating income of $105,300. units?

Answer 1

Contribution Margin Per Unit = Sales price - variable cost per unit
= $83-56
= $27 per unit
Break-even Point In Unit = Fixed Cost/ Contribution Margin Per Unit
= $453600/27
=16800 units
Number of units need to be sold for proft $105300
= (Desired profit + Fixed cost)/ contribution margin per unit
= ($105300 + $453600) /27
=$558900/27
=20700 units

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