if we sell pizzas for $11.99 and our business' variable costs are 60% of the selling price, and we have fixed costs of $21,000 e
1 answer:
Answer:
<u>4375</u> pizzas have to sell to breakeven.
Explanation:
Given:
If we sell pizzas for $11.99 and our business' variable costs are 60% of the selling price, and we have fixed costs of $21,000 each month.
Now, to find pizzas to sell to breakeven.
Fixed costs = $21,000.
Sale price = $11.99.
Variable costs:
60% of the selling price.
Now, to get the number of pizzas to sell to breakeven we put formula:
<u><em>Breakeven = Fixed Costs ÷ (Sale price – Variable costs ) </em></u>
Therefore, 4375 pizzas have to sell to breakeven.
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Answer:
Please check the attached image for the depreciation schedule
2. Units of production method
Explanation:
Book value in year 1 = Cost of asset - Depreciation expense of year 1
Book value in year in subsequent years = previous book value - that year's depreciation expense
Accumulated depreciation is sum of deprecation expense
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($18,000 - $3,000) / 4 = $3,750
Depreciation expense each year of the useful life is $3,750
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Deprecation factor = 2 x (1/useful life) = 0.5
Depreciation expense in year 1 = 0.5 x $18,000 = $9,000
Book value = $18,000 - $9,000 = $9,000
Depreciation expense in year 2 = 0.5 × $9,000 = $4,500
Book value = $9,000 - $4,500 = $4,500
Depreciation expense in year 3 = 0.5 x $4,500 = $2250
Book value = $4,500 - $2250 = $2250
Depreciation expense in year 4 = 0.5 × $2250 = $1125
Depreciation expense using the unit of production method =( Total production in the year/ total productive capacity) × (cost of asset - Salvage value)
Depreciation expense in year 1 = ($18,000 - $3,000) x (300 / 3000) = $1,500
Depreciation expense in year 2 =18,000 - $3,000) x (900 / 3000) = $4,500
Depreciation expense in year 3 = (18,000 - $3,000) x (1200 / 3000) = $6,000
Depreciation expense in year 3 = (18,000 - $3,000) x (600 / 3000) = $3,000
The Units of production method tracks wear and tear accurately because deprecation depends on the production each year.
I hope my answer helps you
