Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 5 - Cost-Volume-Profit Relationships - Exercises - Page 219: Exercise 5-6

Answer

(a) 1400 (b) 21000 (c) 1400 (d) 21000

Work Step by Step

a. Profit = (Price per unit - variable expense per unit) * sales unit - fixed cost => $0 = (15 - 12) * Sales Unit - 4200$ => Sales unit = 1400 b. Profit = ((Price per unit - variable expense per unit)/ Price per unit)* sales values - fixed cost => $0=\frac{(15-12)}{15} \times Sales Value - 4200$ => Sales Values = $\frac{4200}{0.2}=21000$ c. Break-even sales unit = Fixed cost / (Price per unit - Variable cost per unit) $= \frac{4200}{15-12}=1400$ d. Break-even sales unit = Fixed cost / (Price per unit - Variable cost per unit) / Price per unit $= \frac{4200}{\frac{15-12}{15}}=21000$
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