Often a firm will calculate the break-even point for aprice. That is, if we...

90.2K

Verified Solution

Question

Accounting

Often a firm will calculate the break-even point for aprice. That is, if we set the price at $X, then how many units willwe need to sell to cover costs (that is, our break-even point).Work through the following data and questions to gain a betterunderstanding of this approach.
QUESTIONS
Start by completing the above table under the assumption thatthe product will be sold for $30. (It will be easiest to use Excelto complete the table.) How many units need to be sold tobreak-even at a product price of $30?
Now recalculate the table under the assumption that the productwill be sold for $15. How many units need to be sold to break-evenat a product price of $15?
What do you think you would set first: the sales target or theprice? Why?
No. of Units
Allocated Fixed Costs
Variable Cost/Unit
Total Production
Cost
Average Unit Cost
Unit Price
Total Sales Revenue
Gross Profit
500
$10,000
$10
1,000
$10,000
$10
1,500
$10,000
$10
2,000
$10,000
$10
2,500
$10,000
$10

Answer & Explanation Solved by verified expert

4.4 Ratings (989 Votes)

When Sale price per unit Is 30 No of Units Allocated Fixed Costs Variable CostUnit Total Production Average Unit Cost Unit Price Total Sales Revenue Gross Profit Cost 500 10000 10 15000 30 30 15000 1000 10000 10 20000 20 30 30000 10000 1500 10000 10 25000 17 30 45000 20000 2000 10000 10 30000 15 30 60000 30000 2500 10000 10 35000 14 30 75000 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingOften a firm will calculate the break-even point for aprice. That is, if we set...Often a firm will calculate the break-even point for aprice. That is, if we set the price at $X, then how many units willwe need to sell to cover costs (that is, our break-even point).Work through the following data and questions to gain a betterunderstanding of this approach.QUESTIONSStart by completing the above table under the assumption thatthe product will be sold for $30. (It will be easiest to use Excelto complete the table.) How many units need to be sold tobreak-even at a product price of $30?Now recalculate the table under the assumption that the productwill be sold for $15. How many units need to be sold to break-evenat a product price of $15?What do you think you would set first: the sales target or theprice? Why?No. of UnitsAllocated Fixed CostsVariable Cost/UnitTotal ProductionCostAverage Unit CostUnit PriceTotal Sales RevenueGross Profit500$10,000$101,000$10,000$101,500$10,000$102,000$10,000$102,500$10,000$10

No. of Units	Allocated Fixed Costs	Variable Cost/Unit	Total Production Cost	Average Unit Cost	Unit Price	Total Sales Revenue	Gross Profit
500	$10,000	$10
1,000	$10,000	$10
1,500	$10,000	$10
2,000	$10,000	$10
2,500	$10,000	$10