Question

Help Problem 11-28 Determining the break-even point and preparing a contribution margin income stat LO 11-5 Ritchie Manufacturing Company makes a product that it sells for $170 per unit. The company incurs variable manufacturing cost $83 per unit Variable selling expenses are $19 per unit, annual fixed manufacturing costs are $498,000, and fixed selling and administrative costs are $236,400 per year Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method b. Use the contribution margin per unit approach. c. Prepare a contribution margin income statement for the break-even sales volume. Complete this question by entering your answers in the tabs below , Req A to B Req C Prepare a contribution margin income statement for the break-even sales volume. llaRITNYII CHIE MANUFACTURING COMPA < Prev 40, 4111 Next DELL F7 F8 F9 F10 F11 F12 Priscr inser 5 6 7 8

Answer 1

Solution :-

a & b ) :-

Equation method :-

Particulars	Amount
Break-even point in units	= [ $498,000 + $236,400 ] / [ $170 - ( $83 + $19 ) ] = $734,400 / [ $170 - $102 ] = $734,400 / 68 = $10,800
Break-even point in dollars	= [ [ $498,000 + $236,400 ] * $170 ] / [ $170 - ( $83 + $19 ) ] =  [ $734,400 * $170 ] / [ $170 - $102 ] = $124,848,000 / 68 = $1,836,000

( c ) :-

RITCHIE MANUFACTURING COMPANY Contribution Margin Income Statement
Sales	$1,836,000
Variable cost [ 10,800 * ( $83 + $19 ) ]	$1,101,600
Contribution margin [ $1,836,000 - $1,101,600 ]	$734,400
Fixed costs [ $498,000 + $236,400 ]	$734,400
Net Operating Income [ $734,400 - $734,400 ]	$0