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tatiyna
3 years ago
10

A company that manufactures laser printers for computers has monthly fixed costs of $177,000 and variable costs of $650 per unit

produced. The company sells the printers for $1,250 per unit. How many printers must be sold each month for the company to break even
Business
1 answer:
nydimaria [60]3 years ago
6 0

Answer:

295 units

Explanation:

The cost -volume-profits CVP concepts calculate the breakeven point by dividing fixed costs by the contribution margin per unit.

i.e., Breakeven point = Fixed cost/ contribution margin per unit.

For this company,

Fixed costs are $177,000

Contribution margin per unit

= selling price - variable costs.

=$1250 -$650

=$600

Breakeven point = $177,000 / $600

=295 units

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Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $68,000 and $3450, re
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  • What amount will Allegheny report as bad debts Expense on its Year 2 income statement?

Dr Bad Debt Expense $ 8,250

Cr Allowance for Uncollectible Accounts $ 8,250

Explanation:

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Dr Accounts receivable $ 68,000

Cr Allowance for Uncollectible Accounts $ 3,450

 

  • Allegheny write off $6300 of Uncollectible Accounts.  

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Cr Accounts receivable $ 6,300

 

  • Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $5,400  

Dr Bad Debt Expense $ 8,250

Cr Allowance for Uncollectible Accounts $ 8,250

Because the company already has a DEBIT balance ($2,850) in the Allowance for Doubtful Accounts  

it's necessary to register an entry that COMPENSATE ($8,250) the existing value and reflect the value estimated as bad debts ($5,400 = $8,250-$2,850).  

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of estimated value.

Bad accounts are those credits granted by the company and there is no possibility of being charged.

"When customers buy products on credits but the company cannot collect the debt, then it's necessary to cancel the unpaid invoice as uncollectible."

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The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.

When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)

At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.

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