6. Based on the data contained in Table A, what is the break-even poin

QUESTION

6. Based on the data contained in Table A, what is the break-even point in sales dollars?TABLE AAverage selling price per unit $18.00Variable cost per unit $13.00Units sold 400,000Fixed costs $650,000Interest expense $ 50,000 (Points : 1)$2,340,000$1,850,000$1,775,500$700,0007. The final approval of
6) Break-even point in sales dollars:Average selling price per unit $18.00 Variable cost per unit $13.00 Units sold 400,000 Fixed costs $650,000 Interest expense $50,000Total fixed costs = $650,000Break-even point in sales dollars = Fixed costs / Contribution margin ratioBut contribution margin ratio = Contribution margin per unit / Selling price per unit = (Selling price per unit Variable cost per unit) / SP per unit = ($18 $13) / $18 = 0.27778 or 27.778%Break-even point in sales dollars = $650,000 / 0.277778 = $2,340,000Therefore, the beak-even sales in dollars is $2,340,0007) Board of Directors (c)8) Sales = $6,000,000; Variable Costs of Production = $1,500,000; Variable Selling and Administrative Expenses = $550,000; Fixed Costs = $1,350,000; EBIT = $2,600,000; and the Marginal Tax Rate =35%. Molines break-even point in sales dollars isBreak-even point in sales dollars = Fixed costs / Contribution margin ratioTotal variable costs = $1,500,000 $550,000 = $2,050,000But contribution margin ratio = Contribution margin per unit / Selling price per unit = (Sales Variable cost) / SAles = ($6,000,000 $2,050,000) / $6,000,000 = 0.6583 or 65.83%Break-even point in sales dollars = $1,350,000 / 0.658333 = $2,050,633Therefore, the beak-even sales in dollars is $2,050,633 9) Sweet Tooth has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm

expects to sell 500,000 pies annually. What is the break-even point in sales dollars? Contribution margin per unit = Selling price per unit Variable cost per unit = $15.5 $7.5 = $8 Contribution margin ratio = CM per unit / Selling price per unit = $8 / $15.5 = 0.51613 Break-even sales in dollars = Fixed costs / CM ratio = $880,000 / 0.516129 = $1,705,000 Therefore, the break-even sales in dollars is $1,705,000 10) If sales increase by 20% next year, then EBIT will increase by Sales ——————$3,000,000 (-) Variable costs———$1,080,000 ——————————————- Cotribution margin——-$1,920,000 (-) Fixed operating costs- $700,000 —————————————— EBIT———————-$1,220,000 Therefore, the EBIT will increase by $1,220,000 $900,000 = $320,000 Percentage increase = $320,000 / $900,000 = 35.56% Therefore, the correct option is 35% over, due to operating leverage.

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION