Question

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $130,000. Sales (50,000 units) $ 1,000,000 Costs: Direct materials $ 270,000 Direct labor 240,000 Fixed factory overhead 100,000 Variable factory overhead 150,000 Fixed marketing costs 110,000 Variable marketing costs 50,000 920,000 Pretax income $ 80,000

Answer 1

Answer:

Break-even point= 58621 units

Explanation:

Giving the following information:

Sales (50,000 units) $ 1,000,000

Costs:

Direct materials $ 270,000

Direct labor 240,000

Fixed factory overhead 100,000

Variable factory overhead 150,000

Fixed marketing costs 110,000

Variable marketing costs 50,000

We need to use the following formula:

Break-even point= fixed costs/ contribution margin

Price= 1,000,000/50,000= $20

Variable cost= direct material + direct labor + variable moh + variable mkt cots= 270,000 + 240,000 + 150,000 + 50,000= $710,000

Unitary variable cost= 710,000/50,000= $14.2

Fixed costs= fixed moh + fixed mkt= 100,000 + 110,000= 210,000

Profit= 130,000

Break-even point= (210,000 + 130,000) / (20 - 14.2)= 58621 units