BreakEven Sales and Sales to Realize Income from Operations

Break-Even Sales and Sales to Realize Income from Operations

For the current year ending October 31, Yentling Company expects fixed costs of $558,900, a unit variable cost of $56, and a unit selling price of $83.

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

b. Compute the sales (units) required to realize income from operations of $129,600.
units

Solution

Contribution margin=Selling price-Variable costs

=(83-56)=$27 per unit

a.Breakeven point=Fixed cost/Contribution margin

=(558900/27)=20700 units.

b.Target Contribution margin=Fixed cost+Target income from operations

=(558900+129600)=$688500

Hence sales required=$688500/27

=25500 units.