EX 21-11 Break-even sales and sales to realize income from operations

For the current year ended March 31, Chewy Company expects fixed costs of $900,000,

a unit variable cost of $75, and a unit selling price of $120.
a. Compute the anticipated break-even sales (units).
b. Compute the sales (units) required to realize income from operations of $112,500.


Answer:

a. Break-Even Sales (units) = Fixed Costs
Unit Contribution Margin
Break-Even Sales (units) = $900,000
$120 – $75 = 20,000 units
b. Sales (units) = Fixed Costs + Target Profit
Unit Contribution Margin
$900,000 + $112,500
Sales (units) = =
$120 – $75