Harding corporation sells two products, standard and supreme. expected sales are 40,000 standard and 60,000 supreme. standard's
1 answer:
Contribution for Standard is $30 per unit and Supreme is $60 per unit, Thus if Fixed expenses are first divided between the two products on the basis of Contribution per unit, It can be calculated as below:
Fixed Expense Bifurcated on basis of Contribution per unit= 30:60
Which Comes to 1:2
Thus it will be bifurcated as $1200000 for Supreme and $600000 for Standard
Thus for Standard to break even it Requires to Sell the below no of units:
Break Even Point in units=
Break Even Point in units=
Break even points in units=20000 units
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Answer:
The answer is d. 3911
Explanation:
First, we obtain the contribution margin, wih the formula Selling price per unit minus variable expense per unit. So, the contribution margin per unit is .
Next, knowing how much each unit contributes to cover the fixed costs, we can calculate how many units do we need to pay the fixed expenses. This is called "break even point" or BEP. The formula is Fixed Expenses / Contribution margin per unit. So, the BEP is .
With those two things, the final task is to calculate how many units we need, covered the fixed expenses, to achieve the company target profit. The formula is Target profit / Contribution margin per unit. So, the number of units is .
Finally, we add these two number, to obtain the total units needed to cover the fixed costs and achieve the target profit: