Byp 22-2

Topics: Variable cost, Costs, Revenue Pages: 4 (392 words) Published: May 7, 2013
BU 122
Assignment 6 BYP 22-2
TBoillard

(a)The variable costs per unit are:
Cost of goods sold (\$600,000 ÷ 200,000) = \$3.00
Selling expenses (\$140,000 ÷ 200,000) = .70
Administrative expenses (\$40,000 ÷ 200,000) = .20
Total \$3.90

Fixed Costs are:
Cost of goods sold (\$800,000 X .25) \$200,000
Selling expenses (\$280,000 X .50) 140,000
Administrative expenses (\$160.000 X .75)   120,000
\$460,000

The break-even points are:
X = (\$3.90 ÷ \$6.00) X + \$460,000
X = .65X + \$460,000
.35X = \$460,000
X = \$1,314,286 (rounded)

\$6.00X = \$3.90X + \$460,000
\$2.10X = \$460,000
X = 219,048 units (rounded)

(b)Variable unit cost of goods sold = \$3.25
(\$600,000 ÷ 200,000 = \$3.00; \$3.00 + \$.25)
Sales volume = 260,000 units (200,000 X 130%)
Total sales = 260,000 X \$6.25 = \$1,625,000

Net income computation:
Sales \$1,625,000
Variable expenses
Cost of goods sold \$845,000
(260,000 X \$3.25)
Selling expenses  182,000
(260,000 X \$.70)
(260,000 X \$.20) 52,000
Total variable expenses...

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