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ocator assignment-take Search wv2 Online te- Print ? Preview |?Clip [b Auto Clip ?Clip List -B? Search . |?Share! More » Sh... TripAdvisor Break-Even Sales and Cost-Volume-Profit Chart For the Required: 1. Compute the anticipated break even sales (units) corming year, Cleves Company anticipates a unit selling price of $100, a unit variable cost of $60, and f units 2. Compute the sales (units) required to realize a target profit of $240,00o. units 3. Construct a cost-volume-profit chart, assuming maximum sales of 20,000 units within the relevant range. From your chart, indica would produce a profit, a loss, or break-even. $1,200,000 $1,000,000 $800,000 $400,000 $200,000 4. Determine the probable income (loss) from operations if sales total 16,000 units. Break-even v Loss v LOss Loss v Income Feedback Cheak My Work heck My Work

Solution

Requirement 1

Contribution margin per unit = Selling price - variable cost  

= $100-$60 = $40 per unit

Anticipated break even sales units = fixed costs / Contribution margin per unit

= 480,000/ 40

= 12,000 units

Requirement 2

Target profit =$240,000

Fixed costs =$480,000

Required contribution = $720,000  

Sales (units) required to realize a target profit

= 720,000/ $40

= 18,000 units

Requirement 4.

Probable income (loss) from operations if sales total 16,000 units

Contribution margin (16000*40) = $ 640,000

Less:fixed costs = $ 480,000

Income = $ 160,000