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Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Multiple Products CVP Julia Company can produce two types of carpet cleaners, the Brighter and Smarter. The data on the two machines is as follows:
| Brighter | Smarter |
Sales volume in units | 200 | 300 |
Unit sales price | $750 | $1,000 |
Unit variable cost | 225 | 450 |
The number of machine-hours to produce Brighter is 1 and to produce Smarter is 2. Total fixed costs for the manufacture of both products are $132,000.
Required Using a spreadsheet, determine the breakeven point for Julia Company, assuming that the sales mix remains constant in sales dollars.
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Breakeven Point in Units
The breakeven point also known as the breakeven level is can be defined as that level of operations where the company’s revenue is just enough to meet its costs. It is the point at which the company makes no profit no loss and just meet its costs. The breakeven point has a profit equal to zero and revenues exactly equal to the total of variable and fixed costs incurred by the company.
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