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sukhmeet sukhmeet
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6 years ago
Dental Comfort Services provides dental cleanings to its patients. The selling price of a cleaning is $150 and the variable costs associated are $85. The monthly relevant fixed costs are $10,000.

Required:
a. What is the breakeven point in cleanings?
b. What is the margin of safety in dollars, assuming sales total $30,000?
c. What is the breakeven level in cleanings, assuming variable costs decrease by 20%?
d. What is the breakeven level in dollars, assuming the selling price goes down by 10% and fixed costs
increase $1,000 per month?
Textbook 
Cost Accounting: A Managerial Emphasis

Cost Accounting: A Managerial Emphasis


Edition: 16th
Authors:
Read 1006 times
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Replies
wrote...
#1
6 years ago
 
a. N = Breakeven units
$150N - $85N - $10,000 = 0
$65N = $10,000
N = $10,000/$65 = 153.8 or 154 cleanings.

b. Margin of safety = $30,000 - ($150  154) = $6,900

c. N = Breakeven units
$150N - ($85N x 80%) - $10,000 = 0
$150N - $68N = $10,000
N = $10,000/$68 = 147.06 or 148 (rounded up) cleanings.

d. N = Breakeven dollars
CM% = [($150 x 90%) - 85] / ($150 x 90%) = 35.04%
N = ($10,000 + $1,000) / 35.04%
N = $31,393 (rounded)
sukhmeet Author
wrote...
#2
6 years ago
Genius!!!!!!
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