Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
APPLY THE CONCEPTS: Calculate the break-even point in sales dollars for Epstein Hardware Further analysis of Epstein Hardware's fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200
APPLY THE CONCEPTS: Calculate the break-even point in sales dollars for Epstein Hardware
Further analysis of Epstein Hardware's fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct: direct materials cost, $4.80 per unit; direct labor costs, $6.00 per unit; and variable overhead costs, $1.20 per unit. At this time, the selling price of $40 will not change. Complete the following formulas for the revised fixed costs. Enter the ratio as a percentage.
Contribution Margin per Unit=$-$=$
Contribution Margin Ratio=$= % $
Now complete the formulas for (1) the break-even point in sales dollars and (2) the units sold at the break-even point. To calculate this, divide the break-even point in sales dollars by the unit selling price.
Break-Even Point in Sales Dollars=$=$ %
Units Sold at Break-Even Point= units
Assume that the number of units that Epstein sold exceeded the break-even point by one (1).
How much would operating income be?
$
What would operating income be if the units sold exceeded the break-even point by five (5) units?
Expert Solution
Contribution Margin per Unit= Selling price per unit- Variable cost per unit
= 40- (4.80+ 6+ 1.20)
= $28
Contribution margin ratio= (Contribution margin per unit/ Selling price per unit)* 100
= (28/ 40)* 100
= 70%
Break-even sales in dollar= (Fixed cost+ Selling and adm. cost)/ Contribution margin ratio
= (9800+ 4200)/ 40%
= $35000
Unit sold at break even point= Break even sales/ Selling price per unit
= 35000/ 40
= 875
Operating income= Sales made during above units* Contribution margin per unit
= 1* 28
= $28
Operating income= Sales made during above units* Contribution margin per unit
= 5* 28
= $140
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
