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The following totals are used to create a CVP Income Statement for Frederick Company for FY2018: Frederick...

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Accounting

The following totals are used to create a CVP IncomeStatement for Frederick Company for FY2018:

Frederick Company

Selected Financial Figures

For the Year Ended 12/31/18

Sales (100 units)

$10,000

Variable Costs:

     Direct Labor

$1,850

     DirectMaterials

1,400

     Factory Overhead(variable)

2,000

     Selling Expenses(variable)

600

     Administrative Expenses(variable)

500

Fixed Costs:

     Factory Overhead(fixed)

$850

     Selling Expenses(fixed)

1,000

     Administrative Expenses(fixed)

1,000

Frederick Company utilizes a JIT production system andthere are no Raw Materials, Work-in-Process or Finished Goodsinventories. Use this information to determine theFY 2016 breakeven point in units. Round and enter as awhole number.

Answer & Explanation Solved by verified expert
3.7 Ratings (287 Votes)

Breakeven point in units = 78

Per Unit   Total
Sales revenue $ 100.00 $        10,000.00
Less: Variable costs
  Direct Labor $     18.50 $ 1,850.00
      Direct Materials $     14.00 $ 1,400.00
      Factory Overhead (variable) $     20.00 $ 2,000.00
      Selling Expenses (variable) $       6.00 $    600.00
      Administrative Expenses (variable) $       5.00 $    500.00
Total Variable cost $     63.50 $             6,350.00
Contribution Margin $     36.50 $             3,650.00

.

A Sales price per unit $                100.00
B Variable cost per unit $                  63.50
C=A-B Contribution margin per unit $                  36.50
D Fixed expenses $            2,850.00
E=D/C Break Even point in Unit Sales                      78

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