-Colin is the managerial accountant in charge of Company A, which sells water bottles. He previously
determined that the fixed costs of Company A consist of property taxes, a lease, and executive salaries, which add up to $100,000. The variable cost associated with producing one water bottle is
$2 per unit. The water bottle is sold at a premium price of $12. To determine the break even point of Company A's premium water bottle.
-Woodturn Ltd. makes a television table that sells for $50 per unit. It has variable costs of $30 per unit and incurs fixed costs of $100,000 per period. Determine the break even point.
-The Sherston Brick Company manufactures a standard stone block for the building industry. The production capacity for the year is 100,000 standard blocks. The selling price per block is $1.60, variable costs are $0.60 per brick and fixed costs are $60,000 per year. Determine the break even
point)

Respuesta :

Answer:

  1. 10,000 water bottles
  2. 5,000 television tables
  3. 60,000 stone blocks

Explanation:

Breakeven point = Fixed Cost /(Selling price - Variable expenses)

1. Breakeven = 100,000 / (12 - 2)

= 100,000 / 10

= 10,000 water bottles

2. Breakeven = 100,000 / (50 - 30)

= 100,000 / 20

= 5,000 television tables

3. Breakeven = 60,000 / (1.60 - 0.6)

= 60,000 / 1

= 60,000 stone blocks

The break even points are 10,000 water bottles, 5,000 television tables  and 60,000 stone blocks

  • The calculation is as follows:

Breakeven point = Fixed Cost ÷(Selling price - Variable expenses)

1. Breakeven = 100,000 ÷ (12 - 2)

= 100,000 ÷ 10

= 10,000 water bottles

2. Breakeven = 100,000 ÷ (50 - 30)

= 100,000 ÷ 20

= 5,000 television tables

3. Breakeven = 60,000 ÷ (1.60 - 0.6)

= 60,000 ÷ 1

= 60,000 stone blocks

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