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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 36
CHANGES IN BREAK-EVEN POINTS WITH CHANGES IN UNIT PRICES
Cabrera produces and sells bobblehead dolls. Last year, Cabrera sold 156,250 units. The income statement for Cabrera, Inc., for last year is as follows:
Required:
1. Compute the break-even point in units and in revenues. Compute the margin of safety in sales revenue for last year.
2. Suppose that the selling price decreases by 10 percent. Will the break-even point increase or decrease? Recompute the break-even point in units. (Round up to the nearest whole unit.)
3. Suppose that the variable cost per unit decreases by $0.25. Will the break-even point increase or decrease? Recompute the break-even point in units. (Round up to the nearest whole unit.)
4. Can you predict whether the break-even point increases or decreases if both the selling price and the unit variable cost decrease? Recompute the break-even point in units incorporating both of the changes in Requirements 1 and 2. (Round up to the nearest whole unit.)
5. Assume that total fixed costs increase by $50,000. (Assume no other changes from the original data.) Will the break-even point increase or decrease? Recompute it. (Round up to the nearest whole unit.)
Cabrera produces and sells bobblehead dolls. Last year, Cabrera sold 156,250 units. The income statement for Cabrera, Inc., for last year is as follows:
Required:
1. Compute the break-even point in units and in revenues. Compute the margin of safety in sales revenue for last year.
2. Suppose that the selling price decreases by 10 percent. Will the break-even point increase or decrease? Recompute the break-even point in units. (Round up to the nearest whole unit.)
3. Suppose that the variable cost per unit decreases by $0.25. Will the break-even point increase or decrease? Recompute the break-even point in units. (Round up to the nearest whole unit.)
4. Can you predict whether the break-even point increases or decreases if both the selling price and the unit variable cost decrease? Recompute the break-even point in units incorporating both of the changes in Requirements 1 and 2. (Round up to the nearest whole unit.)
5. Assume that total fixed costs increase by $50,000. (Assume no other changes from the original data.) Will the break-even point increase or decrease? Recompute it. (Round up to the nearest whole unit.)
Explanation
Verified
Verified
1.
Compute contribution margin per unit...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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