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Lapatulllka [165]
3 years ago
14

Break-even sales and sales to realize operating income For the current year ended March 31, Cosgrove Company expects fixed costs

of $492,800, a unit variable cost of $44, and a unit selling price of $66. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize operating income of $114,400. units
Business
1 answer:
eimsori [14]3 years ago
4 0

Answer:

a. 22,400 units

b. 27,600 units

Explanation:

Break even point is the level of Activity where a firm neither makes a profit nor a loss.

<em>Break -even (units) = Fixed Costs / Contribution per unit</em>

<u>Contribution per unit</u>

Contribution per unit = Sales per unit <em>less</em> Variable Cost per unit

                                   = $66 - $44

                                   = $22

Break -even (units) =  $492,800 / $22

                                =  22,400 units

<em>Sales units to reach a target profit = (Target Profit + Fixed Costs) / Contribution per unit</em>

                                                        = ($114,400 + $492,800) / $22

                                                        = $607,200 / $22

                                                        = 27,600 units

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