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3 years ago

Bingham Company manufactures and sells Product J. Results for last year's manufacture and sale of Product J are as follows:

Business

1 answer:

monitta3 years ago

7 0

Answer:

Break-even point in units= 16,125

Explanation:

To calculate the number of units of Product J to be sold next year, we can use the break-even point formula:

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Fixed costs= 195,000 + 180,000 + 170,000= $545,000

Unitary contribution margin= 160 - (96 + 24)= $40

Desired profit= $100,000

Break-even point in units= (545,000 + 100,000) / 40

Break-even point in units= 16,125

Prove:

Sales= 16,125*160= 2,580,000

Variable production costs= 16,125*96= (1,548,000)

Sales commissions= 0.15*2,580,000= (387,000)

Salaries of line supervisors= (195,000)

Traceable fixed advertising expense= (180,000)

Fixed general factory overhead= (170,000)

Net operating income= 100,000

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