Question

Problem 3 Roberts, which began business at the start of the current year, had the following data: Planned and actual production: 40,000 units Sales: 37,000 units at $15 per unit Production costs: Variable: $4 per unit Fixed: $260,000 Selling and administrative costs: Variable: $1 per unit Fixed: $32,000 a) Prepare a variable costing statement. b) Compute the breakeven in units. (show computations).

Answer 1

a)

Roberts
Variable costing income statement
Sales (37,000*$15)		$   555,000
Variable expenses
Production (37,000*$4)	$   148,000
Selling and administrative (37,000*$1)	$     37,000
Total variable expense		$   185,000
Contribution margin		$   370,000
Fixed expenses
Production	$   260,000
Selling and administrative	$     32,000
Total fixed expenses		$   292,000
Net income		$     78,000

b)

Break even point in units = Total fixed expenses / contribution margin per unit

Break even point in units = ($260,000+$32,000) / ($15-$5)

Break even point in units = 29,200 Units

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