Answer:
e) $4,651
Explanation:
The break-even point is the level of activity that a company must operate to have its total cost equal to its total revenue. At this level of activity, the business makes a zero profit, as the total contribution is exactly the same as the total fixed cost.
It is important for the business to have an idea of the number of customers or units of product to sell inorder for it to cover its total fixed cost. This is the information the break-point analysis seeks to provide.
Working it out
Break-point in sales = Total General fixed cost/ Contribution margin ratio
Contribution margin ratio (CMR): Contribution is sales less variable costs. And the contribution margin ratio is the proportion of sales that is earned as contribution. The higher the better.
CMR = contribution/sales
Fixed cost = Contribution + net loss
We can now apply all these relationships to the question given:
Fixed cost = 1720 + 280
= 4,000
Contribution margin ratio = 1720/400 = 43%
Break-even sales ($) = 4000/0.43
= $4,651
Answer:
The conversion cost per equivalent unit is $3.31
Explanation:
The computation of the conversion cost per equivalent unit is shown below:
= Total conversion costs ÷ Total equivalent units
where,
Total conversion cost = completed units + Conversion costs during April
= $6,000 + $35,000
= $41,000
And, the total equivalents units equal to
= Finished good units × percentage of completion + ending work in process units × percentage of completion
= 11,500 units × 100% + 1,500 units × 60%
= 11,500 units + 900 units
= 12,400 units
Now put these values to the above formula
So, the per unit would equal to
= $41,000 ÷ 12,400 units
= $3.31 per unit
It is much easier to increase government spending, because it gives a temporary boost, whereas decreasing it would take away the benefits you had before, and might mess up other "things" that relied on that part you just removed to decrease government spending.
