Question 1 - High-Low Cost Estimation and Profit Planning
Comparative 2012 and 2013 income statements for Dakota Products Inc. follow:
|
Unit sales
|
6,000
|
9,000
|
|
Sales revenue
|
$78,000
|
$117,000
|
|
Expenses
|
(70,000)
|
(85,000)
|
|
Profit (loss)
|
$8,000
|
$32,000
|
(a) Determine the break-even point in units.
(b) Determine the unit sales volume required to earn a profit of $12,000.
Question 2 - Multiple Product Break-Even Analysis
Presented is information for Stafford Company's three products.
With monthly fixed costs of $306,000, the company sells two units of A for each unit of B and three units of B for each unit of C.
|
Unit selling price
|
$7
|
$9
|
$7
|
|
Unit variable costs
|
(4)
|
(5)
|
(1)
|
|
Unit contribution margin
|
$3
|
$4
|
$6
|
Determine the unit sales of product A at the monthly break-even point.