Question

Break-Even Sales and Sales to Realize Income from Operations For the current year ended October 31, Friedman Company expects fixed costs of $361,200, a unit variable cost of $43, and a unit selling price of $64. a. Compute the anticipated break-even sales (units). units b. Compute the sales (units) required to realize income from operations of $84,000. units

Answer 1

a. Compute the anticipated break-even sales (units). units

• 17,200 units

b. Compute the sales (units) required to realize income from operations of $84,000. units

• 21,200 units

Step-by-step explanation:

break even point in units = total fixed costs / contribution margin per unit

• total fixed costs = $361,200
• contribution margin per unit = $64 - $43 = $21

break even point in units = $361,200 / $21 = 17,200 units

break even point + expected profits = (total fixed costs + expected profits) / contribution margin per unit

• total fixed costs + expected profits = $361,200 + $84,000 = $445,200
• contribution margin per unit = $64 - $43 = $21

break even point + expected profits in units = $445,200 / $21 = 21,200 units