Problem: Break-even sales and cost-volume-profit chart
For the coming year, Cleves Company anticipates a unit selling price of $120, a unit variable cost of $57.50 and fixed costs of $500,000.
Instructions:
1. Compute the anticipated break-even sales (units).
2. Compute the sales (units) required to realize a target profit of $240,000.
3. Determine the probable operating income (loss) if sales total 15,000 units. Using original fixed costs.
4. Construct a cost-volume-profit chart, assuming maximum sales of 12,000 units within the relevant range.