Session 14 Solutions

# Session 14 Solutions - An Extended Example Impulse Purchase...

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An Extended Example P Break-even \$ sales = Break-even unit volume (for 2007) 2 1,200,000 = Impulse Purchase Co. produces an item which it sells for \$2.00 per unit. In 2007, Impulse earned \$100,000, before taxes; its break-even sales volume was \$1,200,000 and its fixed costs were \$300,000. Impulse expects that fixed costs, variable costs, and unit prices will be the same in 2008 , as they were in 2007. a. What was Impulse's breakeven volume, in units, for 2007? What will it be for 2008? 600,000 = The break-even will be the same for 2008.

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b. What was Impulse’s margin of safety in 2007? (Assume that Impulse sold what it produced.) The volume needed to achieve the profit earned in 2007, \$100,000, can be determined by solving the equation: P - V π T + F = Q T Now, substituting in the equation to determine the volume, above, we get 0.50 100,000 + 300,000 = Q T However, first we need to know the contribution margin per unit, which we can get from = Q B/E x P P P – V F = Breakeven Sales (\$) P – V 2 300,000 = x 2 1,200,000 300,000 = P - V 0.50 = 800,000 units =
So, the margin of safety for 2007 was 800,000 – 600,000 = 200,000 units

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The text passage contains solutions to a series of questions related to break-even analysis for a company named Impulse Purchase Co. It includes calculations and answers to specific questions about break-even volume, margin of safety, and other financial metrics.
multiple_questions_with_answers
Given a text passage, determine:
    1. If it contains a mathematical question (including word problems or calculations)
    2. If an answer to that mathematical question is provided in the text

First, describe the content structure you found in 1-2 sentences.

Then provide your analysis in the following format:
TYPE: <one of the following values>
- NO_QUESTION
- SINGLE_QUESTION
- SINGLE_QUESTION_WITH_ANSWER
- MULTIPLE_QUESTIONS
- MULTIPLE_QUESTIONS_WITH_ANSWERS
system
Session 14 Solutions

# Session 14 Solutions - An Extended Example Impulse Purchase...

This preview shows pages 1–5. Sign up to view the full content.

An Extended Example P Break-even \$ sales = Break-even unit volume (for 2007) 2 1,200,000 = Impulse Purchase Co. produces an item which it sells for \$2.00 per unit. In 2007, Impulse earned \$100,000, before taxes; its break-even sales volume was \$1,200,000 and its fixed costs were \$300,000. Impulse expects that fixed costs, variable costs, and unit prices will be the same in 2008 , as they were in 2007. a. What was Impulse's breakeven volume, in units, for 2007? What will it be for 2008? 600,000 = The break-even will be the same for 2008.

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View Full Document
b. What was Impulse’s margin of safety in 2007? (Assume that Impulse sold what it produced.) The volume needed to achieve the profit earned in 2007, \$100,000, can be determined by solving the equation: P - V π T + F = Q T Now, substituting in the equation to determine the volume, above, we get 0.50 100,000 + 300,000 = Q T However, first we need to know the contribution margin per unit, which we can get from = Q B/E x P P P – V F = Breakeven Sales (\$) P – V 2 300,000 = x 2 1,200,000 300,000 = P - V 0.50 = 800,000 units =
So, the margin of safety for 2007 was 800,000 – 600,000 = 200,000 units

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c.
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### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern
user
The text passage contains solutions to a series of questions related to break-even analysis for a company named Impulse Purchase Co. It includes calculations and answers to specific questions about break-even volume, margin of safety, and other financial metrics.

TYPE: MULTIPLE_QUESTIONS_WITH_ANSWERS