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For the coming year, River Company estimates fixed costs at $109,000, the unit variable cost at $21, and the unit selling price at $85. Determine (a) the break-even point in units of sales, (b) the unit sales required to realize operating income of $150,000, and (c) the probable operating income if sales total $500,000.
Round units to the nearest whole number and percentage to one decimal place.
On Jun 04, 2024
a.$109,000 ÷ ($85 - $21) = 1,703 units
b.($109,000 + $150,000) ÷ $64 = 4,047 units
c.CM ratio = $64 ÷ $85 =75.3%
$500,000 × 75.3% = $376,500 contribution margin
$376,500 - $109,000 fixed costs = $267,500 operating income