Reference no: EM132663796
Break-Even Point in Units
The break-even point can be expressed in terms of sales dollars or number of units. The break-even units tells us how many units must be sold so that operating income is $0.
Problem 1: Assume that you are part of the accounting team for Brooks Products. The company currently expects to sell 964 units for total revenue of $21,100 each month. Brooks Products estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,600 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below.
Brooks Products : Contribution Margin Income Statement
Sales $______
Less: Variable cost $_______
Contribution margin $_________
Less: Fixed costs $_______
Operating income $______
Brooks Products is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). $_______ Next, complete the formula below to determine the break-even units.Total Fixed Costs / Contribution Margin per Unit = Units $_____ / $______ = _____ units
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: Break-Even Point in Units, Determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar)
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