BreakEven Sales and Sales to Realize Income from Operations

Break-Even Sales and Sales to Realize Income from Operations

For the current year ended October 31, Friedman Company expects fixed costs of $476,700, a unit variable cost of $43, and a unit selling price of $64.

a. Compute the anticipated break-even sales (units).
units

b. Compute the sales (units) required to realize income from operations of $109,200.
units

Solution

(a)BEP (units)= Fixed cost/contribution pu

Fixed cost =476700

Contribution pu= SP - VC pu

=64-43= 21

BEP=476700/21=22700 units

(b) Let ‘x’ be the units sold to realise income from operations

[ (SP-VC) * x] - FC = 109200

[(64-43) * x] - 476700 = 109200

x = 27900 units