Meriden Company Has A Unit Selling Price Of 530 Variables

Meriden Company has A Unit Selling Price Of 530 Variable C

Meriden Company has a unit selling price of $530, variable costs per unit of $265, and fixed costs of $165,625. Compute the break-even point in units using the mathematical equation.

Paper For Above instruction

The objective of this paper is to analyze the financial dynamics of Meriden Company, specifically focusing on calculating the break-even point in units based on given financial parameters. The key figures provided include the unit selling price, variable costs per unit, and total fixed costs. Understanding the break-even point is crucial for determining the sales volume necessary to cover all fixed and variable costs, ensuring the company does not incur a loss.

To compute the break-even point in units, we utilize the fundamental break-even formula:

Break-even units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Substituting the values provided:

  • Fixed Costs = $165,625
  • Selling Price per Unit = $530
  • Variable Costs per Unit = $265

Therefore:

Break-even units = 165,625 / (530 - 265) = 165,625 / 265 = 625 units

Hence, Meriden Company must sell approximately 625 units to break even. This means that once sales reach this volume, the company covers all fixed and variable costs, resulting in neither profit nor loss.

Understanding the break-even point aids management in strategic planning, setting sales targets, and making informed decisions about pricing, cost management, and production levels. It is essential for assessing risk and viability in the company’s financial operations.

References

  • Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2020). Managerial Accounting (16th ed.). McGraw-Hill Education.
  • Hilton, R. W., & Platt, D. E. (2019). Managerial Accounting: Creating Value in a Dynamic Business Environment (11th ed.). McGraw-Hill Education.
  • Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2022). Introduction to Management Accounting (17th ed.). Pearson.
  • Drury, C. (2018). Management and Cost Accounting (10th ed.). Cengage Learning.
  • Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2021). Managerial Accounting (16th ed.). Wiley.
  • Anthony, R. N., Hawkins, D. F., & Merchant, K. A. (2019). Management Control Systems (12th ed.). McGraw-Hill Education.
  • Zimmerman, J. L. (2020). Accounting for Decision Making and Control (10th ed.). McGraw-Hill Education.
  • Siegel, G., & Shim, J. K. (2018). Financial Management and Accounting Fundamentals. Barron’s Educational Series.
  • Antle, R., & Demski, J. (2017). Cost Analysis and Management Decision-Making. Springer.
  • Burke, M., & Brownell, P. (2020). Introduction to Financial Accounting. Cengage Learning.

Related Assignments