Managerial Accounting Practice

Hello Carl;

Ref: Managerial Accounting Practice IP5

Following your email on the operations you have undertaken in your company, I am glad to take this opportunity to analyze California Container division’s breakeven point. The company produces packaging for cell phone; therefore its calculations will be as follows:

a) Old break even quantity

    Sales   = $3.24 per unit

    V.C      = $1.37 per unit

    F.C      = $257,000

Sales = Variable Costs (VC) + Fixed expenses (FC) + Profit

Let Quantity be Q;

$3.24Q = $1.37Q + $127,000 + $0

$1.87Q = $127,000

Q         = 67, 915 units

b)  New Break even quantity

            Sales    = $3.24 per unit

            V.C     = $1.52 per unit

            F.C      = $257,000

Sales = Variable Costs (VC) + Fixed expenses (FC) + Profit

Let Quantity be Q;

$3.24Q = $1.52Q + $127,000 + $0

$1.72Q = $127,000

Q         = 73,837 units

c)  Sales = Variable Costs (VC) + Fixed expenses (FC) + Profit

Old profit = Sales – VC –FC= (3,300,000 * 3.24) – (1.37 * 3,300,000) – 257,000= $5,914,000

For the same profit to be realized, due to increase in variable costs, number of packages need to be increased.

            Profit = Sales – VC – FC

            $5,914,000 = $3.24Q -$1.52Q - $127,000

             $1.72Q = $6,041,000

            Q = 3,512,210 packages

Therefore the company needs 212,210 (3,512,210 – 3,300,000) more packages in order to realize the same profit. 

  1. The Managerial Accounting essay
  2. Quantitative Reasoning essay
  3. National Pen Company essay
  4. Audit Procedures essay
  5. The Corporate Governance essay
  6. Public Accounting essay
  7. Accounting and Reporting essay
  8. Separate Financial Statements essay
  9. The Corporate or Private Sector essay
  10. Financial Reporting in Public Accounting essay

0

Preparing Orders

0

Active Writers

0

Support Agents

Limited offer Get 15% off your 1st order
get 15% off your 1st order with code first15
Close
  Online - please click here to chat