Reference no: EM132520269
Calculate the break-even point in sales dollars for Epstein Hardware
Further analysis of Epstein Hardware's fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct: direct materials cost, $4.00 per unit; direct labor costs, $5.00 per unit; and variable overhead costs, $1.00 per unit. At this time, the selling price of $20 will not change. Complete the following formulas for the revised fixed costs. Enter the ratio as a percentage.
Contribution Margin per Unit=
Contribution Margin Ratio=$= %
Question 1: Now complete the formulas for the break-even point in sales dollars and the units sold at the break-even point. To calculate this, divide the break-even point in sales dollars by the unit selling price.
Break-Even Point in Sales Dollars=$=$ %
Units Sold at Break-Even Point= units
Assume that the number of units that Epstein sold exceeded the break-even point by one (1).
Question 2: How much would operating income be?
Question 3: What would operating income be if the units sold exceeded the break-even point by five (5) units?
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