Question

**Using the following data,
calculate the**

**breakeven point and margin of
safety in units:**

qSelling Price = $50

oVariable Cost = $40

oFixed Cost = $70,000

oPlanned Budgeted Sales = 7,500 units

HOW TO **DRAW** THE BEP GRAPH IN DETAILS FOR THIS
QUESTION ?

Answer #1

Given information

Selling price per unit = 50

Variable cost per unit = 40

Calculate contribution per unit

Contribution per unit = Sales price – Variable cost

Contribution = 50 – 40 = 10

Fixed cost = 70,000

Break even point in units = Fixed cost/Contribution per unit

Break even point in units = 70,000 / 10 = 7000 units

Budgeted sales = 7500 units

Margin of safety = Budgeted sales – Break even sales

MOS = 7500 – 7000 = 500 units

The following is the break even diagram

Calculate the breakeven point and contribution margin.
Breakeven point
Fixed cost
Contribution margin
Selling price per unit
Variable cost per unit
units
$88,400
$
$9
$5

Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 11,700,000
Total variable cost
6,669,000
Contribution margin
$ 5,031,000
Total fixed cost
2,871,024
Operating income
$ 2,159,976
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest...

Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 11,700,000
Total variable cost
7,371,000
Contribution margin
$ 4,329,000
Total fixed cost
2,705,144
Operating income
$ 1,623,856
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest cent....

Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$11,700,000
Total variable cost
8,190,000
Contribution margin
$3,510,000
Total fixed cost
2,254,200
Operating income
$1,255,800
Required:
1(a). Compute variable cost per unit. Round
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Round your answer to the nearest cent.
$per unit...

- The margin of safety is:
a) The difference between estimated sales and breakeven
sales.
b) Not a useful measure for management in understanding the risk
associated with a product line.
c) The amount sales can drop before the target profit is
met.
d) How far sales must increase to earn a profit.
- Which of the following is the amount by which sales
could drop before profits reach the breakeven point?
a) Operating leverage
b) Total contribution margin
c)...

Calculate the firms breakeven point in units?
Draw a breakeven chart for this firm.
FC = 20
P = 2
VC = .80

Use the following information to determine the margin of safety
in dollars: Unit sales 70,000 Units Dollar sales $ 700,000 Fixed
costs $ 174,052 Variable costs $ 329,000

Break-Even Units and Sales Revenue: Margin of Safety
Dupli-Pro Copy Shop provides photocopying service. Next year,
Dupli-Pro estimates it will copy 3,130,000 pages at a price of $0.1
each in the coming year. Product costs include:
Direct materials
$0.015
Direct labor
$0.005
Variable overhead
$0.002
Total fixed overhead
$178,400
There is no variable selling expense; fixed selling and
administrative expenses total $40,000.
Required:
In your computations that involve the contribution margin ratio,
do not round the ratio.
1. Calculate the...

From the following data, calculate break-even point expressed in
terms of units and also the new BEP, if the selling price is
reduced by 20%.
Fixed cost:
Variable expenses:
Depreciation
SR 200,000
Materials
SR 5 per unit
Salaries
SR 50,000
Labor
SR 5per unit
Selling price
SR 15 per unit

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Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 9,000,000
Total variable cost
5,310,000
Contribution margin
$ 3,690,000
Total fixed cost
2,476,400
Operating income
$ 1,213,600
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per...

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