Solution-What would operating income be if the units sold

What would operating income be if the units sold exceeded

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Reference no: EM132598487

APPLY THE CONCEPTS: Calculate the break-even point in sales dollars for Clapton Products

Further analysis of Clapton Products'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=$= % $

Now complete the formulas for (1) the break-even point in sales dollars and (2) 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 Clapton sold exceeded the break-even point by one (1).

Question 1: How much would operating income be?

Question 2: What would operating income be if the units sold exceeded the break-even point by five (5) units?

Reference no: EM132598487

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What would operating income be if the units sold exceeded

Reference no: EM132598487

Reference no: EM132598487

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