Bus 208 - Principles of Accounting II Home Assignment 08 Chapter 21

BUS-208-Priciples of Accounting II

Home Assignment 08

Chapter 21

a)

Cost of Goods sold 5,000,000 x 42% = 2,100,000

Selling expenses 2,800,000 x 44% = 1,232,000

Administrative expenses 1,720,000 x 65%= 1,118,000

Total Fixed cost 4,450,000

Cost of Goods sold 5,000,000 x 58% = 2,900,000

Selling expenses 2,800,000 x 56%= 1,568,000

Administrative expenses 1,720,000 x 35%= 602,000

Total Variable cost 5,070,000

b)

(1) the unit variable costs

5,070,000 / 94,500 Units = $53.65 per unit

(2) the unit contribution margin.

110 sales price – 53.65 = $ 56.34 contribution margin

c)

Compute the break-even sales (units) for 2015.

4,450,000 fixed costs / 56.34 contribution margin = 78,984 units (Approx.)

d)

Compute the break-even sales (units) under the proposed program.

135,000+4,450,000=