Question 1

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

Question 2

Janets's Custom Golf sells special clubs. Janet is able to purchase equipment from a manufacturing company for $90 each. The equipment is sold for $170 each.

Required:

1. What is the break-even in units assuming Janet incurred $4,500 in selling expenses,

and there were no other expenses?

2. What would be the break-even in units assuming Janet incurred $4,500 in selling

expenses and had $9,000 in other fixed expenses?

Question 3

Following is the Becker Company Ltd. partial income statement for the most recent year:

Becker Company Ltd.

Partial Income Statement

Most Recent Year

Sales $ 1,190,000

Cost of goods sold 476,000

Gross margin $ 714,000

Less operating expenses:

Fixed $39,000

Variable 357,000 396,000

Operating income $ 318,000

1. What would the Becker Company sales have to be in order for the company to

have an operating income of $500,000?

Question 4

What is the break-even point in units for a product line, assuming a unit selling price of $150, total fixed costs are $3,000, unit variable costs are $50, and target operating income is $10,000,000?

Question 5

Bartwell Company sells several products. Information of average revenue and costs is as follows:

Selling price per unit $31.50

Variable costs per unit:

Direct material $4.25

Direct manufacturing labour $2.15

Manufacturing overhead $0.30

Selling costs $1.75

Annual fixed costs $140,000

1. The Bartwell Company contribution margin ratio is?

2. The Bartwell Company break-even in sales dollars is?

3. The Bartwell Company break-even in units is?