Question

ACC2233 Hand-In Assignment 3 QUESTION 1 Compute the Break-Even Point Mackson Products distributes a single product, a woven basket, its selling price is $8 and its variable cost is $6 per unit. The company's monthly fixed expense is $5,500 Required: 1. Solve for the company's break-even point in unit sales using the equation method. 2. Solve for the company's break-even point in sales dollars using the equation method and CM ratio. 3. Solve for the company's break-even point in unit sales using the contribution margin method 4. Solve for the company's break-even point in sales dollars using the contribution margin met and the CM ratio. QUESTION 2 Break-Even Analysis and CVP Graphing Horace Society is planning its annual Western Fair Raceway Gala The Gala committee has assembled the following expected costs for the event: S2 Dinner (per person) $10 Gaming tokens and program (per person) Prize payouts $4,300 Tickets and advertising $800 Private box suite rental $1,700 Lottery licences $200 The committee members would like to charge $40 per person for the evening's activities Required: 1. Compute the break-even point for the Gala (in terms of the number of persons that must attend.) 2. Assume only 200 persons attended the Gala last year. If the same number attend this year, what price per ticket must be charged to break even? 3. Using the $40 ticket price per person amount, prepare a CVP graph for the Gala from zero tickets up to 600 tickets sold.

Answer 1

Question 1 Selling Price per Unit Variable cost per unit 8 Contribution per unit $5,500.00 Fixed Cost 1 Assume Break Even sales x the equation is Fixed Cost (8x-6x) 5500=(8x-6x) 5500 2x Solving the equiation, breakeven units 5500/2 275o 2 Breakeven sales usng equatin method x the equation is Fixed Cost (8x-6x)/8 5500=(8x-6x)/8 5500 2x/8 Solving the equiation, breakeven sales in dollors 5500/2*8 22000 Selling Price per Unit Variable cost per unit 8 a b 6 c a-b Contribution per unit 2 c/a Contribution margin 25% Breakeven sales in dolllors Fixed costs / contribution margin 5500/25% =22000 3 Selling Price per Unit Variable cost per unit 8 b Contribution per unit c-a-b 2 c/a Contribution margin 25% Breakeven sales in dolllors Fixed costs/ contribution margin = 5500/25% = 22000 Breakeven sales in units break even in dollors sale price per unit 22000/8-2750 Selling Price per Unit Variable cost per unit a c a-b Contribution per unit 2 c/a Contribution margin 25% Breakeven sales in dolllors Fixed costs / contribution margin 5500/25% 22000 CM Ratio 2:8 1:4 Break even sales Fixed Cost* CM Ratio= 5500*4 22000 Question 2 1 Dinner (per person) $ 10.00 Gaming tokens and progra $ Prize payouts Ticket and advertising 2.00 $4,300.00 $ 800.00 $1,700.00 $ 200.00 Private box suite rental Lottory licences $ Charge per person 40.00 a Variable cost per person Dinner (per person) Gaming tokens and progra $ $ 10.00 2.00 $ Total variable cost 12.00 b a-b Contribution per person S 28.00 35 Fixed Cost Prize payouts $4,300.00 Ticket and advertising $ 800.00 $1,700.00 Private box suite rental $ 200.00 $7,000.00 Lottory licences Total Break even point fixed cost/variable per unit 7000/28 250 2 Contribution per person needed to break even with 200 persons total fixed cost/200 7000/200 35 Variable cost per unit 12 Sale price contribution+ variale cost 35+12=47 C-V-P GRAPH $30, 000 $25, 00 S20, 000 $15, 000 $10, 000 S5, 000 SO 0 100 200 300 400 500 600 Sales Volume (units) Chart Data Table Units Sales F. Costs T. Costs v. Costs 7000 7000 7000 7000 7000 0 0 4000 8000 1200 2400 8200 100 9400 10600 200 300 12000 3600 16000 20000 4800 6000 7000 7000 7000 11800 400 13000 14200 500 600 24000 7200