Reference no: EM132948991
Based on the relationships in CVP Limited's 2020 Income Statement, answer each of the following for questions. Each question is independent of the others.
Problem 1: Calculate the breakeven point in Units. Round any partial units up.
Problem 2: Calculate the sales dollars rounded to the nearest dollar needed to increase operating income by $100,000. Ignore minor rounding difference in your answer. - i.e. increase operating income by $99,950 to $100,050.
Problem 3: To the nearest dollar what would sales revenue need to be to earn net income of $175,000. Ignore minor rounding differences - i.e. net income can range from $149,900 to $150,100
Problem 4: Assuming there will be no interest expense, determine the necessary units to be produced and sold to earn net income of $150,000. Ignore minor rounding differences - i.e. round up the units to be within the range from $149,900 to $150,100.
Data Set
CVP Limited Income Statement for the Year Ended December 31, 2020
Units produced and sold 10,000
Sales $1,000,000
Direct Material 140,000
Direct Labour 50,000
Variable Manufacturing Overhead 40,000
Fixed Manufacturing Overhead 399,992
Gross Margin 370,008
Fixed Selling General and Administrative Expense 130,000
Variable Selling General and Administrative Expense 50,000
Operating Income 190,008
Interest Expense 57,000
Net Income before Taxes 133,008
Income Tax Expense at 30% Rounded 39,900
Net Income $93,108
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