Question

Rundle Corporation produces products that it sells for $16 each. Variable costs per unit are $4, and annual fixed costs are $259,200. Rundle desires to earn a profit of $31,200. Required a. Use the equation method to determine the break-even point in units and dollars. b. Determine the sales volume in units and dollars required to earn the desired profit. ſ $ a. Break-even point in units Break-even point in dollars b. Sales volume in units Sales in dollars 21,600 345,600 24,200 387,200 $ s

Is this correct? If not, what are the correct answers?

Answer 1

Requirement a:

i Break-even point in units = Fixed costs ÷ (Selling price per unit - Variable cost per unit)

= $259,200 ÷ ($16-$4)

=$259,200 ÷ $12

=21,600 units

ii. Break-even point in dollars = Break-even point in units x Selling price per unit

=21,600 units x $16

=$345,600

Requirement b:

i. Sales volume in units = (Fixed costs + desired profit) ÷ (Selling price per unit - Variable cost per unit)

= ($259,200+$31,200) ÷ ($16-$4)

=$290,400 ÷ $12

=24,200 units

ii. Sales in dollars = Sales in units x Selling price per units

= 24,200 units x $16

=$387,200