Trevino Company makes and sells products with variable costs of $24 each. Trevino incurs annual fixed costs of $315,000. The current sales price is $87.
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b. Determine the break-even point in units and in dollars. Prepare an income statement using the contribution margin format.
Prepare an income statement using the contribution margin format. (Do not round intermediate calculations. Round your final answers to nearest whole number.)
Explanation
Variable cost (5,000 × $24) = $120,000
c. Suppose that Trevino desires to earn a $252,000 profit. Determine the sales volume in units and dollars required to earn the desired profit. Prepare an income statement using the contribution margin format.
Suppose that Trevino desires to earn a $252,000 profit. Prepare an income statement using the contribution margin format. (Do not round intermediate calculations. Round your final answers to nearest whole number.)
Explanation
d. If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
If the sales price drops to $80 per unit, prepare an income statement using the contribution margin format.
e. If fixed costs drop to $280,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
If fixed costs drop to $280,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
If fixed costs drop to $280,000, prepare an income statement using the contribution margin format.
f. If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
If variable cost rises to $30 per unit, prepare an income statement using the contribution margin format.
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g. Assume that Trevino concludes that it can sell 10,000 units of product for $80 each. Recall that variable costs are $30 each and fixed costs are $280,000. Compute the margin of safety in units and dollars and as a percentage.
Required
The following requirements are interdependent. For example, the $252,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements.
a. Determine the contribution margin per unit.
b. Determine the break-even point in units and in dollars. Prepare an income statement using the contribution margin format.
Prepare an income statement using the contribution margin format. (Do not round intermediate calculations. Round your final answers to nearest whole number.)
Explanation
Formula for Computation of Break-Even Point in Units
| Fixed cost | = | $315,000 | = 5,000 units |
| Contribution margin per unit | $63 |
| Break-Even Point in Sales Dollars | |||
| Sales price | $ | 87 | |
| × Number of units | 5,000 | ||
| Sales volume in dollars | $ | 435,000 | |
Variable cost (5,000 × $24) = $120,000
Suppose that Trevino desires to earn a $252,000 profit. Prepare an income statement using the contribution margin format. (Do not round intermediate calculations. Round your final answers to nearest whole number.)
Explanation
d. If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
If the sales price drops to $80 per unit, prepare an income statement using the contribution margin format.
e. If fixed costs drop to $280,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
If fixed costs drop to $280,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
If fixed costs drop to $280,000, prepare an income statement using the contribution margin format.
f. If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars. Prepare an income statement using the contribution margin format.
If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.
If variable cost rises to $30 per unit, prepare an income statement using the contribution margin format.
Thanks
g. Assume that Trevino concludes that it can sell 10,000 units of product for $80 each. Recall that variable costs are $30 each and fixed costs are $280,000. Compute the margin of safety in units and dollars and as a percentage.
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