+1 346 244 4124

The break-even point

The Bruggs & Strutton Company manufactures an engine for carpet cleaners called the “Snooper.”  Cost and revenue data for the “Snooper” are given below, based on sales of 40,000 units.

Sales \$1,600,000

Less: Cost of goods sold    1,120,000

Gross margin                 \$   480,000

Less: Operating expenses      100,000

Operating income before taxes \$   380,000

Cost of goods sold consists of \$800,000 of variable costs and \$320,000 of fixed costs.  Operating expenses consist of \$40,000 of variable costs and \$60,000 of fixed costs.

Required:

A. Calculate the break-even point in units and sales dollars.

B. Calculate the safety margin.

C. Bruggs & Strutton received an order for 6,000 units at a price of \$25.00.  There will be no increase in fixed costs, but variable costs will be reduced by \$0.54 per unit because of cheaper packaging.  Determine the projected increase or decrease in profit from the order.

D. Bruggs also received an order for 2,500 units at \$29 per unit.  If packaging costs will not be reduced on this order and only one order (“C” or “D”) can be accepted, which order is more attractive?

The break-even point

The Bruggs & Strutton Company manufactures an engine for carpet cleaners called the “Snooper.”  Cost and revenue data for the “Snooper” are given below, based on sales of 40,000 units.

## “Is this question part of your assignment? We Can Help!”

##### "Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

The break-even point

The Bruggs & Strutton Company manufactures an engine for carpet cleaners called the “Snooper.”  Cost and revenue data for the “Snooper” are given below, based on sales of 40,000 units.

Sales \$1,600,000

Less: Cost of goods sold    1,120,000

Gross margin                 \$   480,000

Less: Operating expenses      100,000

Operating income before taxes \$   380,000

Cost of goods sold consists of \$800,000 of variable costs and \$320,000 of fixed costs.  Operating expenses consist of \$40,000 of variable costs and \$60,000 of fixed costs.

Required:

A. Calculate the break-even point in units and sales dollars.

B. Calculate the safety margin.

C. Bruggs & Strutton received an order for 6,000 units at a price of \$25.00.  There will be no increase in fixed costs, but variable costs will be reduced by \$0.54 per unit because of cheaper packaging.  Determine the projected increase or decrease in profit from the order.

D. Bruggs also received an order for 2,500 units at \$29 per unit.  If packaging costs will not be reduced on this order and only one order (“C” or “D”) can be accepted, which order is more attractive?

The break-even point

The Bruggs & Strutton Company manufactures an engine for carpet cleaners called the “Snooper.”  Cost and revenue data for the “Snooper” are given below, based on sales of 40,000 units.

## “Is this question part of your assignment? We Can Help!”

##### "Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp