The Following Information Was Extracted from the Accounting Records of Gumbo

question 153

Essay

The following information was extracted from the accounting records of Gumbo Corporation:
Sales price per unit $60
Variable cost per unit $20
Total fixed costs $480,000
A. Calculate Gumbo's break-even point in units.
B. How many units must be sold to earn operating income of $80,000?
C. Calculate Gumbo's break-even point in units if the sales 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:

Rival Colonies

Settlements or territories established by competing European powers in the New World, often leading to conflict over land, resources, and influence.

English Colonies

Settlements established by England in various parts of the world, notably in North America, during the 17th and 18th centuries.

Junction

A point where two or more circuit elements meet.