Homework SourseUnits Sold to Break Even Unit Variable Cost Unit Manufacturi
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income
Werner Company produces and sells disposable foil baking pans to retailers for $3.10 per pan. The variable cost per pan is as follows:
Fixed manufacturing cost totals $422,822 per year. Administrative cost (all fixed) totals $57,658.
Required:
1. Compute the number of pans that must be sold for Werner to break even.
pans
2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent.
Which is used in cost-volume-profit analysis?
Unit variable manufacturing cost
3. How many pans must be sold for Werner to earn operating income of $11,680?
pans
4. How much sales revenue must Werner have to earn operating income of $11,680?
$
| Direct materials | $0.22 |
| Direct labor | 0.51 |
| Variable factory overhead | 0.62 |
| Variable selling expense | 0.15 |
Solution
1) Break even point = (422822+57658)/(3.10-1.50) = 300300 Units
2) Unit variable cost = (0.22+0.51+0.62+0.15) = 1.50 per unit
Unit variable manufacturing cost = (0.22+0.51+0.62) = 1.35 per unit
in cost volume profit analysis unit variable cost used.
3) Required unit sales = (422822+57658+11680)/1.60 = 307600 Units
4) Sales revenue = 307600*3.1 = $953560
