Answer:
a. Accounting Break-Even 25,000
Depreciation = $125,000
b. Accounting Break-even 120,000
Unit price = $44
c. Accounting Break-Even 12,000
Unit variable cost = $10
Explanation:
a) Data and Calculations:
a. Accounting Break-Even 25,000
Unit Price $24
Unit Variable Cost $10
Fixed Costs $225,000
Depreciation $?
Sales Revenue = $600,000 ($24 * 25,000)
Variable cost = 250,000 ($10 * 25,000)
Contribution = $350,000
Fixed costs = 225,000
Depreciation = 125,000 ($350,000 - $225,000)
b. Accounting Break-Even 120,000
Unit Price $?
Unit Variable Cost $14
Fixed Costs $2,400,000
Depreciation $1,200,000
Unit Price $44
Unit Variable Cost $14
Fixed Costs $2,400,000
Depreciation $1,200,000
Contribution $3,600,000
Contribution per unit = $30 ($3,600,000/120,000)
Unit price = $44 ($30 + $14)
c. Accounting Break-Even 12,000
Unit Price $25
Unit Variable Cost $?
Fixed Costs $140,000
Depreciation $40,000
Contribution = $180,000
Contribution per unit = $15
Unit variable cost = $10 ($25 = $10)
Answer:
$125,000
$44
$10
Explanation:
Breakeven quantity are the number of units produced and sold at which net income is zero
Breakeven quantity = (depreciation + fixed cost) / price – variable cost per unit
a 25,000 = (d + $225,000) / ($24 - $10)
25,000 = (d + $225,000) / $14
d = 350,000 - $225,000
d = $125,000
b. 120,000 = ( $2,400,000 + 1,200,000) / (p - $14)
120,000 x (p - $14) = $3,600,000
p = ( $3,600,000 / 120,000) + 14
p = $44
12,000 = (140,000 + 40,000) / (25 - v)
12,000(25 - v) = 180,000
v = 25 - (180,000/ 12,000)
v = $10
