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)
Administrative expenses
  (260,000 X $.20) 52,000
Total variable expenses...
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