Question

Hawk Homes, Inc., makes one type of birdhouse that it sells for $30.40 each. Its variable cost is $14.90 per house, and its fixed costs total $13,314.50 per year. Hawk currently has the capacity to produce up to 2,700 birdhouses per year, so its relevant range is O to 2,700 houses. points Required: 1. Prepare a contribution margin income statement for Hawk assuming it sells 1,260 birdhouses this year. 2. Without any calculations, determine Hawk's total contribution margin if the company breaks even. 3. Calculate Hawk's contribution margin per unit and its contribution margin ratio. 4. Calculate Hawk's break-even point in number of units and in sales revenue. 5. Suppose Hawk wants to earn $22,000 this year. Determine how many birdhouses it must sell to generate this amount of profit. Skipped eBook Complete this question by entering your answers in the tabs below. Print References Required 1 Required 2 Required 3 Required 4 Required 5 Prepare a contribution margin income statement for Hawk assuming it sells 1,260 birdhouses this year. (Enter your answers rounded to 2 decimal places.) HAWK HOMES, INC. Contribution Margin Income Statement Contribution Margin Income from Operations

Answer 1

1) Contribution margin income statement

	Total	Per unit
Sales	82080	30.40
Variable cost	40230	14.90
Contribution margin	41850	15.50
Fixed cost	13314.50
Operating income	28535.50

2) Total Contribution margin = $13314.50

3) Contribution margin per unit = 30.40-14.90 = 15.50

Contribution margin ratio = 15.50/30.40 = 51%

4) Break even unit = 13314.50/15.5 = 859 Units

Break even revenue = 859*30.40 = 26113.60

5) Target unit sale = (13314.50+22000)/15.50 = 2278 Units