Question

Maple Enterprises sells a single product with a selling price of $70 and variable costs per unit of $28. The company's monthly fixed expenses are $25,200. A. What is the company's break-even point in units? Break-even units units B. What is the company's break-even point in dollars? Break-even dollars $ C. Construct a contribution margin income statement for the month of September when they will sell 1,000 units. Use a minus sign for a net loss if present. Income Statement D. How many units will Maple need to sell in order to reach a target profit of $46,200? New break-even units units E. What dollar sales will Maple need in order to reach a target profit of $46,200? New break-even dollars $ F. Construct a contribution margin income statement for Maple that reflects $133,000 in sales volume. come Statement

Answer 1

A.

Breakeven point = Fixed expenses / Contribution per unit = 25,200 / (70 - 28) = 600 UNITS

B.

Breakeven in dollars = Breakeven in units X Selling price per unit = 600 X 70 = $ 42,000

C.

Income Statement
Sales	$                 70,000
Variable Costs	$                 28,000
Contribution Margin	$                 42,000
Fixed Expenses	$                 25,200
Net Profit	$                 16,800

D.

New break even units = (Target profit + Fixed Expenses) / Contribution per unit = (46,200 + 25,200) / 42 = 1,700 units

E.

Dollar sale = 1,700 X 70 = $ 119,000

F.

Income Statement
Sales	$               133,000
Variable Costs	$                 53,200
Contribution Margin	$                 79,800
Fixed Expenses	$                 25,200
Net Profit	$                 54,600