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3 years ago

EA11.

Business

1 answer:

stich3 [128]3 years ago

6 0

Answer:

The question is incomplete. The complete question is given as follows:

Selling Price per unit Variable cost per unit

Product $ $

Snowboards 320.00 170.00

Skis 400.00 225.00

Poles 50.00 20.00

Answer: Snowboard-840 units, Ski- 360 units and Poles-240 units

Explanation:

The break-even point is the activity level where the total cost of a business is the same as its total revenue. At this point, the business makes neither profit nor loss. This analysis helps a firm to know how many clients to be served or units to be produced in order to cover its fixed costs.

A break-even point can be calculated using the following relationships below:

A single-product scenario

Break-even point (in units) = Total general fixed costs/(selling price -Variable cost)

Multiple-products scenario

Break-even point (in units) = Total general fixed costs/ average contribution per unit.

Total general fixed costs are period costs which remain the same within a given activity level, and cannot be said to be incurred for a specific product.

We will use use the second formula, because there are multiple product

Snow Ski Poles

$ $ $

Selling price 320 400 50

Variable cost <u>(170)</u> <u>(225)</u> <u> (20)</u>

Contribution(SP-VC) 150 175 30

Cont. from a mix(cont × unit) 1050 525 60

Average contribution = (1050+525+60)/(7+3+2)

= $136.25

Break-even point (in units) = $196200/$136.25

= 1,440 units.

Salvador will need to sell a total of 1,440 units in following mix to break-even:

Snowboards= (7/12) *× 1,440= 840 units

Skis= (3/12) × 1,440= 360 units

Poles = (2/12) ×1.440= 240 units

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Sep. 3 Purchased merchandise inventory on account from Shallin Wholesalers, $7,000. Terms 1/15, n/EOM, FOB shipping point.

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Answer:

Sep. 3

Dr Merchandise Inventory $7,000

Cr Accounts Payable—Shallin Wholesalers $7,000

Sep. 4

Dr Merchandise Inventory $55

Cr Cash $55

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Dr Merchandise Inventory $2,100

Cr Cash $2,100

Sep. 6

Dr Accounts Payable—Shallin Wholesalers $1,000

Cr Inventory $1,000

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Dr Accounts Receivable— Herenda Company $5,445

Cr Sales Revenue $5,445

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Dr Cost of Goods Sold $2,255

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Dr Merchandise Inventory $10,000

Cr Accounts Payable—Tripp Wholesalers $10,000

Sep. 10

Dr Accounts Payable—Shallin Wholesalers $6,000

Cr Merchandise Inventory $60

Cr Cash $5,940

Sep. 12

Dr Cash $5,445

Accounts Receivable—Herenda Company $5,445

Sep. 13

Dr Accounts Payable—Tristan Wholesalers $100

Cr Merchandise Inventory $100

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Dr Accounts Receivable—Jesper Company $3,500

Cr Sales Revenue $3,500

Sep. 15

Dr Cost of Goods Sold $1,610

Cr Merchandise Inventory $1,610

Sep. 22

Dr Accounts Payable—Tristan Wholesalers $9,900

Cr Cash $9,900

Sep. 23

Dr Refunds Payable $800

Cr Accounts Receivable—Jesper Company $800

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Dr Merchandise Inventory $368

Cr Estimated Returns Inventory $368

Sep. 25

Dr Accounts Receivable—Smithson $1,995

Cr Sales Revenue $1,940

Cr Cash $55

Sep. 25

Dr Cost of Goods Sold $780

Cr Merchandise Inventory $780

Sep. 29

Dr Cash $1,995

Cr Accounts Receivable— Smithson $1,995

Sep. 30

Dr Cash $2,100

Cr Accounts Receivable—Jesper Company $2,100

Explanation:

Preparation of the journal entries

Sep. 3

Dr Merchandise Inventory $7,000

Cr Accounts Payable—Shallin Wholesalers $7,000

Sep. 4

Dr Merchandise Inventory $55

Cr Cash $55

Sep. 4

Dr Merchandise Inventory $2,100

Cr Cash $2,100

Sep. 6

Dr Accounts Payable—Shallin Wholesalers $1,000

Cr Inventory $1,000

Sep. 8

Dr Accounts Receivable— Herenda Company $5,445

Cr Sales Revenue $5,445

[$5,500-(1%*$5,500)]

Sep. 8

Dr Cost of Goods Sold $2,255

Cr Merchandise Inventory $2,255

Sep. 9

Dr Merchandise Inventory $10,000

Cr Accounts Payable—Tripp Wholesalers $10,000

Sep. 10

Dr Accounts Payable—Shallin Wholesalers $6,000

($7,000-$1,000)

Cr Merchandise Inventory $60

(1%*$6,000)

Cr Cash $5,940

($6,000-$60)

Sep. 12

Dr Cash $5,445

[$5,500-(1%*$5,500)]

Accounts Receivable—Herenda Company $5,445

Sep. 13

Dr Accounts Payable—Tristan Wholesalers $100

Cr Merchandise Inventory $100

Sep. 15

Dr Accounts Receivable—Jesper Company $3,500

Cr Sales Revenue $3,500

Sep. 15

Dr Cost of Goods Sold $1,610

Cr Merchandise Inventory $1,610

Sep. 22

Dr Accounts Payable—Tristan Wholesalers $9,900

Cr Cash $9,900

($10,000-$100)

Sep. 23

Dr Refunds Payable $800

Cr Accounts Receivable—Jesper Company $800

Sep. 23

Dr Merchandise Inventory $368

Cr Estimated Returns Inventory $368

Sep. 25

Dr Accounts Receivable—Smithson $1,995

($1,940+$55)

Cr Sales Revenue $1,940

[$2,000-(3%*$2,000)]

Cr Cash $55

Sep. 25

Dr Cost of Goods Sold $780

Cr Merchandise Inventory $780

Sep. 29

Dr Cash $1,995

($1,940+$55)

Cr Accounts Receivable— Smithson $1,995

Sep. 30

Dr Cash $2,100

Cr Accounts Receivable—Jesper Company $2,100

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Using this formula

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