Problem 19-5A (Part Level Submission) Viejol Corporation has collected the follo

Question

Problem 19-5A (Part Level Submission) Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000 on 100,000 units, selling expenses $240,000 40% variable and 60% fixed direct materials $514,000 direct labor $270 400 administrative expenses $282,000 (20% variable and 80% fixed), and manufacturing overhead $376,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year. Expand question part | ? (b) Compute the break-even point in units and sales dollars for the current year. (Round intermediate calculations to 2 decimal places e.g. 2.25 and final answers to O decimal places, e.g. 1,225.) Break-even point in units units Break-even point in dollars LINK TO TEXT LINK TO TEXT LINK TO TEXT

Explanation / Answer

Answer:-Total Variable cost =Direct material+ Direct labor + Administrative expenses+ Manufacturing overhead + Selling expenses

=$514000+$270400+($282000*20%)+($376000*70%)+ ($240000*40%)

=$514000+$270400+$56400+$263200+$96000

=$1200000

Total sales =$1600000

Contribution margin =Sales – Variable costs

=$1600000-$1200000

=$400000

Contribution margin per unit =$400000/100000 units =$4 per unit

Contribution margin ratio=($400000/$1600000)*100 =25%

Total fixed costs =($282000*80%)+($376000*30%)+($240000*60%)

=$225600+$112800+$144000

=$482400

Break even points in units =Fixed costs/ Contribution margin per unit

=$482400/$4 per unit =120600 units

Break even points in dollars=Fixed costs/ Contribution margin ratio

=$482400/25%= $1929600

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