1. Using a detailed graph, determine the breakeven point, assuming the selling price of a product is $100, fixed costs are $8,000, variable costs per unit are $20, and operating income is $32,000

 

2. How many units would need to be sold to generate a target operating income of $22,000, assuming variable costs are $15 per unit, total fixed costs are $2,000, and the unit selling price is $20 ?

3. Business Process Professionals provides the following ABC cost information:

Activities                                    Total Costs           Activity Cost Factors

Account consulting hours           $400,000             10,000 hours

Account billing lines                     $280,000            4,000,000 lines

Account verification accounts    $150,000            40,000 accounts

Correspondence letters               $50,000                 4,000 letters

Total costs                                      $880,000

The above activities are used by its Registration and Investigations Departments as follows:

Recording of Investigations

Account consultation hours         2,000 hours         4,000 hours

Account billing lines                      400,000 lines       200,000 lines

Account verification accounts   10,000 accounts     8,000 accounts

Correspondence letters           1,000 letters              1,600 letters

Questions

How much of the account inquiry cost will be allocated to Recording?

How much of the account billing cost will be allocated to Investigations? 

How much of the total costs will be allocated to Recording? 

Answer rating: 100% (QA)

To determine the breakeven point we need to find the quantity at which the total revenue equals the total cost The total cost consists of fixed costs and variable costs per unit Lets denote S Selling ... View the full answer