Chapter 11 Units because the sales mix is weighted more toward

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subject Authors Carl S. Warren

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349
P11–3
1. Break-Even Sales (units) = arginMonContributiUnit
CostsFixed
3.
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350
P11–4
1.
Break-Even Units:
Break-Even Dollars:
Contribution Margin Ratio = $400 – $240
$400 = 40%
$5,000,000
$4,000,000
Operating
Profit Area
Sales
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351
P11–4, Continued
2.
a. b.
8,000 units 10,000 units
$5,000,000
$4,000,000
$3,488,000
$3,200,000
b
Operating
Profit Area
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352
P11–4, Continued
3.
Break-Even (units):
$5,000,000
$4,000,000
$0
02,000 4,000 6,000 8,000 10,000
7,800
Units of Sales
Loss Area
Operating
Profit Area
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353
P11–4, Concluded
4.
a. b.
8,000 units 10,000 units
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354
P11–5
(Overall product is labeled E.)
1. Unit selling price of E [($400 × 80%) + ($800 × 20%)] ................. $480
5. The overall enterprise break-even point decreased from 7,500 units to 5,000
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355
P11–6
1.
ORGANIC HEALTH CARE PRODUCTS INC.
Estimated Income Statement
For the Year Ended December 31, 20Y8
Sales (400,000 × $25) ......................................... $ 10,000,000
Expenses:
Selling expenses:
Advertising .............................................. $ 1,450,000
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356
P11–6, Continued
2. Contribution Margin Ratio = Sales Variable Costs
Sales
3. Break-Even Sales (units) = Margin onContributiUnit
Costs Fixed

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