Question

Break-even sales and sales to realize operating income For the current year ended March 31, Cosgrove Company expects fixed costs of $382,200, a unit variable cost of $42, and a unit selling price of $63. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize operating income of $88,200. units

Answer 1

Answer:

1. 18,200 units

2. 22,400 units

Step-by-step explanation:

Cosgrove Company

1.Computation of the anticipated break-even sales (units

Using this formula

Contribution per unit = selling price - variable cost per unit

= $63 - $42 = $21

Formula for Break Even Sales (units)

Break Even Sales (units) = (fixed cost÷contribution per unit)

= ($382,200÷$21)

= 18,200 units.

2.Computation of the sales (units) required to realize operating income of $88,200. units

Using this formula

Desired Sales (units) = (fixed cost + desired operating income)÷contribution per unit.

= ($382,200 + $88,200)÷$21

= $470,400 ÷ $21

= 22,400 units.