Cost—Volume—Profit Equation, Basic Concepts, Solving for Unknowns (LO 1,2,3 and 5) Goldilocks Company produces high-end combination shampoos...

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Cost—Volume—Profit Equation, Basic Concepts, Solving forUnknowns (LO 1,2,3 and 5)
Goldilocks Company produces high-end combination shampoos andconditioners in individual-use bottles for hotels. Each bottlesells for $0.90.
The variable costs for each bottle (materials, labour, andoverhead) total $0.63. The total fixed costs are $210,600. Duringthe most recent year 830,000 bottles were sold.
Required:
1. What is the BEP in units for Goldilocks? What is the marginof safety in units for the recent year?
2. Prepare an income statement for Goldilocks's most recentyear.
3. How many units must be sold for Goldilocks to earn a profitof $40,500?
4. Using the contribution marginpercentage approach, what is the level of sales dollars needed forGoldilocks to earn operating income of 20 percent of sales?

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3.6 Ratings (611 Votes)

Answer 1 The break even point in units is calculated as follows Breakeven point in units Fixed expense Contribution margin pu 210600 027 pu 780000 units Where Contribution margin pu Selling price pu variable See Answer

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Cost—Volume—Profit Equation, Basic Concepts, Solving forUnknowns (LO 1,2,3 and 5)Goldilocks Company produces high-end combination shampoos andconditioners in individual-use bottles for hotels. Each bottlesells for $0.90.The variable costs for each bottle (materials, labour, andoverhead) total $0.63. The total fixed costs are $210,600. Duringthe most recent year 830,000 bottles were sold.Required:1. What is the BEP in units for Goldilocks? What is the marginof safety in units for the recent year?2. Prepare an income statement for Goldilocks's most recentyear.3. How many units must be sold for Goldilocks to earn a profitof $40,500?4. Using the contribution marginpercentage approach, what is the level of sales dollars needed forGoldilocks to earn operating income of 20 percent of sales?