Question & Answer: Alpha Company publishes & sells a calendar for $6.50 each. The variable cost per calendar is $3.50 with th…..

Alpha Company publishes & sells a calendar for $6.50 each. The variable cost per calendar is $3.50 with the current annual sales volume of 200,000 calendars. This volume is currently Alpha’s breaking even point. Use this information to determine the dollar amount of Alpha’s fixed costs. (Round any total dollar value to the nearest whole dollar & enter as whole dollars only. Round any unit dollar value to the nearest penny & enter with both dollar(s) & cents. Round any unit non-dollar decimal numbers to the next higher whole number and enter as a whole number.)

Expert Answer

Annual Demand units 200000
Selling Price 6.50
Variable Cost 3.50
Contribution per Unit 3.00
Contribution 600000
BEP Unit 200000
BEP Amount BEP Unit * Contribution per Unit
200000 * 3.00 = 600000
Since BEP Amount Contribution = Fixed Cost
Fixed Cost 600000

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