A Firm Provides the Following Sales Data Required:
(A) Calculate the Break-Even Point in Dollar Sales

question 155

Essay

A firm provides the following sales data: $$\begin{array} { l r l r } \text { Expected unit sales } & 5,000 & \text { Unit variable cost } & \$ 10 \\\text { Unit selling price } & \$ 16 & \text { Total fixed cost } & \$ 12,000\end{array}$$
Required:
(a) Calculate the break-even point in dollar sales.
(b) Calculate the margin of safety in dollar sales.

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Definitions:

Operating Cycle

The time period between the acquisition of goods for sale and the receipt of cash from customers, measuring the efficiency of a company's operational processes.

Inventory Purchases

Transactions involved in buying goods and materials to be sold or used in the production process by a business.

Collection of Cash

Collection of cash involves the process of receiving cash payments from customers or clients, typically recorded as an increase in cash or cash equivalents on the balance sheet.

Accrual Basis Accounting

Revenues are recognized when goods and services are provided to customers, and expenses are recognized in the same period as the revenues to which they relate, regardless of when cash is received or paid.