The Following Information Was Extracted from the Accounting Records of Gumbo

question 104

Essay

The following information was extracted from the accounting records of Gumbo Corporation: $\begin{array}{lr}\text { Selling price per unit } & \$ 60 \\\text { Variable cost per unit } & \$ 20 \\\text { Total fixed costs } & \$ 480,000\end{array}$
A. What is Gumbo’s break-even point in units?
B. How many units must be sold to earn operating income of $80,000?
C. What is Gumbo’s break-even point in units is the selling price increases by 20% and the variable costs decrease by 20%?
D. Using the information in part C, what sales level in dollars is needed to earn an operating income of $80,000?

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Definitions:

Value

The importance, worth, or usefulness of something, typically measured in monetary terms or significance.

Stocks

Shares of ownership in a company, representing a claim on the company's earnings and assets.

Bonds

Fixed-income instruments that represent a loan made by an investor to a borrower, usually corporate or governmental, which pays back the face value at maturity, along with regular interest payments.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.