Chapter 18: Q10QS (page 834)
Zhao Co. has fixed costs of \(354,000. Its single product sells for \)175 per unit, and variable costs are $116 per unit. Determine the break-even point in units.
The business entity has to sell6,000 units to achieve break-even.
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Hudson Co. reports the contribution margin income statement for 2017 below. Using this information, compute Hudson Co.’s (1) break-even point in units and (2) break-even point in sales dollars.
HUDSON CO. | |
Contribution margin income statement | |
For the year ended December 31, 2017 | |
Sales (9,600 units @ \(225 each) | \)2,160,000 |
Less: Variable cost (9,600 units @ \(180 each) | 1,728,000 |
Contribution margin | 432,000 |
Less: Fixed cost | 324,000 |
Pre-tax income | \)108,000 |
Refer to the information in Exercise 18-16. The marketing manager believes that increasing advertising costs by $81,000 in 2018 will increase the company’s sales volume to 11,000 units. Prepare a forecasted contribution margin income statement for 2018 assuming the company incurs the additional advertising costs.
Zhao Co. has fixed costs of \(354,000. Its single product sells for \)175 per unit, and variable costs are $116 per unit. If the company expects sales of 10,000 units, compute its margin of safety (a) in dollars and (b) as a percent of expected sales.
Google uses variable costing for several business decisions. How can variable costing income be converted to absorption costing income?
Corme Company expects sales of \(34 million (400,000 units). The company’s total fixed costs are \)17.5 million and its variable costs are $35 per unit. Prepare a CVP chart from this information.
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