What causes the low breakeven point


Question:

Calculating cost-volume profit elements The budgets of four companies yield the following information:

 

Company

 

Up

Down

Left

Right

Sales revenue

$ 900,000

$ (4)

$ 710,000

$ (10)

Variable costs

(1)

208,000

319,500

240,000

Fixed costs

(2)

135,000

235,000

(11)

Operating income (loss)

$ 10,000

$ (5)

$ (7)

$ 49,000

Units sold

100,000

16,000

(8)

(12)

Contribution margin per unit

$ 3.60

$ (6)

$ 78.10

$ 10.00

Contribution margin ratio

(3)

0.60

(9)

0.20

Requirements

1. Fill in the blanks for each missing value. (Round the contribution margin to the nearest cent.)

2. Which company has the lowest breakeven point in sales dollars?

3. What causes the low breakeven point?

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Accounting Basics: What causes the low breakeven point
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