Managerial Accounting
Anthea
ManagerialAccounting_Project.docxRunning Head: MANAGERIAL ACCOUNTING 1
MANAGERIAL ACCOUNTING 3
Cost Volume Calculation: Breakeven Point
Student Name
Institutional Affiliation
Cost Volume Calculation: Breakeven Point
1. Break-even quantities for each product line
a. The breakeven quantity for High end set:
= ($25000+$85000)/$1225
=90 units
b. The breakeven For the economical set:
= ($16500+$85000)/$450
= 226 units
2. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price)
To earn $500000 per year margin on the high end line:
= ($25000+$85000+$500000)/$1225
= 498 units
3. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price)
To earn $ 300000 per year margin on the economical line:
= ($16500+$85000+$300000)/$450
= 893 units
Present the information using this tabular format
|
|
|
|
|
|
Description |
Fixed/variable cost |
Unit for Break-even point |
Sale price/ unit |
|
High end set |
$25000 |
90 |
$1,004.1 |
|
Economical set |
$16500 |
226 |
$335.6 |
|
|
|
|
|
Describe how you performed your calculations
To calculate the break even quantity for a high end set, direct fixed costs for a high end set ($25000) is added with the allocated fixed costs of a high end set ($85000). The sum is divided by subtracting the sales price ($3500) by the summation of labor ($875) and materials ($1400)
To calculate the break even quantity for the economical set, direct fixed costs are added with the allocated fixed costs of the economical set(Gorham, 1970).). The summation is then divided by the subtraction of the sales price (1000) by the addition of labor and materials of the economic set.
To calculate the Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price), the direct fixed cost and the allocated fixed costs of a high end set are added together with the $500000 per year margin (Kong & Wu, 2009). The sum is divided by subtracting the sales price ($3500) by the summation of labor ($875) and materials ($1400
To calculate the Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price) the direct fixed cost and the allocated fixed costs of the economical line are added together with the $300000 per year margin. The summation is then divided by the subtraction of the sales price (1000) by the addition of labor and materials of the economic set (Wallington, Barnden, Glasbey & Lee, 2006).
Explain what the results mean
From the Break-even quantities to earn $500,000 per year margin on the high-end line, the company must sell 498 units to cover their fixed expenses.
From the break even quantities, to earn $300000 per year margin on the economic set, 893 units need to be sold to cover the variable costs (Ross, Dalsace, & Anderson, 2005).
References
Gorham, T. (1970). Determining Economic Purchase quantities for parts with price breaks. PIM, 11, 36-42.
Kong, J., & Wu, Y. (2009). On economical set representations of graphs.
Ross Jr, W. T., Dalsace, F., & Anderson, E. (2005). Should you set up your own sales force or should you outsource it? Pitfalls in the standard analysis. Business Horizons, 48(1), 23-36.
Wallington, A. M., Barnden, J. A., Glasbey, S. R., & Lee, M. G. (2006). Metaphorical reasoning with an economical set of mappings. DELTA: Documentação de Estudos em Lingüística Teórica e Aplicada, 22(SPE), 147-171.
Running
Head:
MANAGERIAL ACCOUNTING
1
Cost Volume Calculation: Breakeven Point
Student Name
Institutional Affiliation
Running Head: MANAGERIAL ACCOUNTING 1
Cost Volume Calculation: Breakeven Point
Student Name
Institutional Affiliation
