Answer:
Explanation:
income statement for Khaling for last year.
Sales of 19,000 units last year at $18.00 each. = 19,000 * $18 = $342,000
Variable cost was $14.60 per unit = 19,000 x $14.60 = $277,400
Total fixed cost was $68,000
Income Statement
Sales. $342,000
Less:
Variable cost $277,400
Fixed cost. $68,000
Loss. ($3,400)
2. Calculate the break-even point in units.
BEP = fixed cost / (selling price - variable cost)
BEP = 68,000/(18-14.60)
BEP = 68,000/3.4
BEP = 20,000 units
3. Calculate the units that Khaling must sell to earn operating income of $20,400 this year.
The total units to be sold is 26,000 units to earn a profit of $20,400
Sales (26,000*18). $468,000
Less
Variable (26,000*14.60) $379,600
Fixed cost. $68,000
Income. $20,400
