Break-Even Sales and Cost-Volume-Profit Chart For the coming year, Sorkin Compan
ID: 2466030 • Letter: B
Question
Break-Even Sales and Cost-Volume-Profit Chart
For the coming year, Sorkin Company anticipates a unit selling price of $114, a unit variable cost of $57, and fixed costs of $359,100.
Required:
1. Compute the anticipated break-even sales in units.
units
2. Compute the sales (units) required to realize income from operations of $182,400.
units
3. Construct a cost-volume-profit chart, assuming maximum sales of 12,600 units within the relevant range. From your chart, indicate whether each of the following sales levels would produce a profit, a loss, or break-even.
4. Determine the probable income (loss) from operations if sales total 10,100 units. If required, use the minus sign to indicate a loss.
$ Income
Explanation / Answer
1. Break even sales in units = Fixed costs / contrinbution margin per unit
= 359100 / 114 - 57
= 6300 units.
2. Sales units = 541500 (359100 + 182400) / 114 - 57 = 9500 units
3. Sales [ 12600*114] 1436400
less: variable cost [12600*57] (718200)
Contribution margin 718200
less: fixed expenses (359100)
Operating income 359100
the above table indicates 718200 break even
4. Sales [ 10100 * 114] 1151400
less: variable cost (575700)
Contribution margin 575700
less: fixed expenses (359100)
Operating income 216600.