Task: Break-Even Computation
B&B company reports the following items:
Direct materials per unit . . . . . . . . $ 2.25
Direct labor per unit . . . . . . . . . . 3.95
Variable overhead per unit . . . . 1.80
Monthly rent . . . . . . . 2,200.00
Monthly depreciation . . . . . 680.00
Other monthly fixed costs. . . . . . . 2,400.00
Sales price per unit . . . . . . 14.00
Using the above information, compute the company's monthly break-even point (in units).
Break-Even Point and Target Income
Steven Newman, Inc., estimates 2009 costs to be as follows:
Direct materials . . . . . . $5 per unit
Direct labor. . . . . . $8 per unit
Variable manufacturing overhead . . . $3 per unit
Variable selling and administrative expenses . . . . . . . . $2 per unit
Fixed expenses. . . . . . . $80,000
Question 1. Assuming that Newman will sell 55,000 units, what sales price per unit will be needed to achieve a $75,000 profit?
Question 2. Assuming that Newman decides to sell its product for $23 per unit, determine the break-even sales volume in dollars and units.
Question 3. Assuming that Newman decides to sell its product for $23 per unit, determine the number of units it must sell to generate a $100,000 profit