BreakEven Sales and Sales to Realize Income from Operations

Break-Even Sales and Sales to Realize Income from Operations For the current year ending March 31, Jwork Company expects fixed costs of $605,000, a unit variable cost of $50, and a unit selling price of $75 a. Compute the anticipated break-even sales (units). b. Compute the sales (units) required to realize income from operations of $140,000. units

Solution

CALCULATION OF CONTRIBUTION MARGIN PARTICULARS AMOUNT Selling Price Per Unit= $                           75 Less: Variable Cost Per Unit $                           50 Contribution Margin Per Unit $                           25 Answer = 1 CALCULATION OF THE BREAK EVEN POINT IN UNITS Break Even point =      Fixed Cost / Contribution Margin Per Unit Break Even point =       Fixed Cost = $               6,05,000 Divide By \"/\" By Contribution Margin Per Unit = $                           25 Break Even point =       24200 Units Answer Break even point in units = 24,200 Units Answer = 2 Computation of the sales (Units) required to realize the net income =140,000 No. of Units to produced the desired profit = Desired profit in Dollars / contribution margin per unit + Break even number of units No. of Units to produced the desired profit = Desired profit in dollars = 140000 Divide By = \"/\" By Contributyiton margin per unit = $                           25 \"=\"                         5,600 Units Add: Break even number of units =                       24,200 Units Total Units for required profit =                       29,800 Units Answer = 29,800 Units