Assume that a company has forecasted 5,800 units sold, has an average selling price of $25.00 per unit, unit variable cost of $10.00 per unit, and a total fixed cost equal to $84,000. Using the template provided, perform the following analyses:
a. Create a Contribution-format Income Statement based on the forecasted data
b. Create a Contribution-format Income Statement based on the Break-even Sales Volume
c. Create a Contribution-format Income Statement based on a target profit equal to $6,000
INCOME STATEMENTS | ||||||||||||
Forecast | Break-even | Target Profit | ||||||||||
Total | Per Unit | % | Total | Per Unit | % | Total | Per Unit | % | ||||
Number of units sold | ||||||||||||
Price/Revenues | ||||||||||||
Variable Cost | ||||||||||||
Contribution Margin | ||||||||||||
Total Fixed Cost | ||||||||||||
Operating Profit | ||||||||||||
Operating Profit % |
Income Statement | |||||
FORECAST data | |||||
Amnt($) | Amnt($) | per unit | |||
Number of Units Sold | 5,800 | ||||
Average selling Price $25/ unit | 5800*25 | ||||
Revenue | 5800*25 | 1,45,000 | 25 | ($145000/5800) | |
Less | |||||
Variable cost $10/ unit | 5800*10 | 58,000 | 10 | ($58000/5800) | |
Contribution Margin | 87,000 | 15 | ($87000/5800) | ||
Contribution Margin % | (87000/145000) | 60% | |||
Less | |||||
Total Fixed cost | 84,000 | ||||
Operating profit | 3,000 | ||||
Operating profit % | (3000/145000) | 2% | |||
Breakeven Point in Unit Sales ( Volume) | |||||
Total Fixed cost/Contribution margin per unit | |||||
Total Fixed cost $ | 84,000 | ||||
Contribution margin per unit( as above)-$/Unit | 15 | ||||
Number of Units | (84000/15) | 5,600 |
BREAK EVEN BASIS | |||||
Amnt($) | Amnt($) | per unit | |||
Number of Units Sold | 5,600 | ||||
Average selling Price $25/ unit | 5600*25 | ||||
Revenue | 5600*25 | 1,40,000 | 25 | ($140000/5600) | |
Less | |||||
Variable cost $10/ unit | 5600*10 | 56,000 | 10 | ($56000/5600) | |
Contribution Margin | 84,000 | 15 | ($84000/5600) | ||
Contribution Margin % | (84000/140000) | 60% | |||
Less | |||||
Total Fixed cost | 84,000 | ||||
Operating profit ( Break even ) | - | ||||
Operating profit % | 0% |
Create a Contribution-format Income Statement based on a target profit equal to $6,000 | ||||||
Total Fixed cost $ | 84,000 | |||||
Target Profit $ | 6000 | |||||
Contribution $-A | 90,000 | |||||
Revenue $/ unit | 25 | |||||
Variable cost $/ unit | 10 | |||||
Contribution $/ unit-B | 15 | |||||
Number of Unit (A/B) | 6,000 | |||||
Income Statement | ||||||
Amnt($) | Amnt($) | per unit | ||||
Number of Units Sold | 6,000 | |||||
Average selling Price $25/ unit | 6000*25 | |||||
Revenue | 6000*25 | 1,50,000 | 25 | ($150000/6000) | ||
Less | ||||||
Variable cost $10/ unit | 6000*10 | 60,000 | 10 | ($60000/6000) | ||
Contribution Margin | 90,000 | 15 | ($90000/6000) | |||
Contribution Margin % | (90000/150000) | 60% | ||||
Less | ||||||
Total Fixed cost | 84,000 | |||||
Operating profit | 6,000 | |||||
Operating profit % | (6000/150000) | 4% |
Assume that a company has forecasted 5,800 units sold, has an average selling price of $25.00...
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