a) Equation Method | ||
Selling price per unit | $ 200.00 | |
Variable cost per Unit ($110 + $20) | $ 130.00 | |
Fixed Cost = $466,000 + $269,000 | $ 735,000.00 | |
At BEP = Revenue = Fixed Cost + Variable Cost | ||
Let X be the units produced | ||
$200 X = $735,000 + $130X | ||
X = $735,000/($200 - $130) | 10,500.00 | units |
BEP in Units | 10,500.00 | |
BEP in Dollars = 10,500 x $200 | $ 2,100,000.00 | |
b) | ||
Selling price per unit | $ 200.00 | |
Less: Variable cost per Unit ($60 + $18) | $ 130.00 | |
Contribution Margin per unit | $ 70.00 | |
Contribution Margin ratio = $70/$200 | 35.00% | |
BEP in Units = Fixed Cost/ Contribution margin per unit = $735,000/$70 | 10,500.00 | units |
BEP in Dollars = Fixed Cost / Contribution Ratio = $735,000/35% | $ 2,100,000.00 | |
c) | ||
Preparing a contribution margin income statement for the break-even sales volume | ||
Ritchie Manufacturing Company | ||
Contribution margin income statement | ||
Sales = 10,500 units x $200 | $ 2,100,000.00 | |
Less: Variable Cost 10,500 x $130 | $ 1,365,000.00 | |
Contribution margin | $ 735,000.00 | |
Less: Fixed Cost | $ 735,000.00 | |
Net Income | $ 0.00 |
Ritchie Manufacturing Company makes a product that it sells for $200 per unit. The company incurs...
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Ritchie Manufacturing Company makes a product that it sells for $160 per unit. The company incurs variable manufacturing costs of $73 per unit. Variable selling expenses are $15 per unit, annual fixed manufacturing costs are $490,000, and fixed selling and administrative costs are $258,800 per year. Required Determine the break-even point in units and dollars using each of the following approaches: Use the equation method. Use the contribution margin per unit approach. Use the contribution margin ratio approach. Prepare a...
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Ritchie Manufacturing Company makes a product that it sells for $160 per unit. The company incurs variable manufacturing costs of $70 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $496,000, and fixed selling and administrative costs are $274,400 per year. Required Determine the break-even point in units and dollars using each of the following approaches: Use the equation method. Use the contribution margin per unit approach. Prepare a contribution margin income statement for the...
Ritchie Manufacturing Company makes a product that it sells for $160 per unit. The company incurs variable manufacturing costs of $73 per unit. Variable selling expenses are $15 per unit, annual fixed manufacturing costs are $490,000, and fixed selling and E administrative costs are $258,800 per year. Required Determine the break-even point in units and dollars using each of the following approaches: E a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution...