Homework Answers
a)
Let unit is A
Sale price x units = Variable cost per unit x units + Fixed cost + profit
$160 x A = ($84+$12)x A+ ($470000+$208400)
$160A = $96A+ $678400
$160A-$96A = $678400
$64A = $678400
A = $678400÷$64
A = 10,600 unit
Break even in dollars = break even units x price
= 10600 x 160 = $16,96,000
b)
Contribution per unit = Sale price - variable cost per unit
= $160-$84-$12
= $64
Break even units = Fixed cost / contribution per unit
= $678400÷$64
= 10600 units
break even in dollars= break even units x price
= 10600 x $160
= $1696000
c)
contribution margin ratio = price - variable cost per unit /
price
= $160-$12-$84 ÷ $160
= 40%
Break even in dollars= fixed cost ÷ contribution margin
ratio
= $678400 ÷ 40%
= $16,96,000
break even in units = Break even in dollars ÷ Price
= $1696000 ÷ $160
= 10600 units
d)
Contribution margin income statement for break even sales
sales = 10600 x $160 = $16,96,000
variable cost = 10600 x $96 = $10,17,600
contribution margin = $6,78,400
fixed cost = $6,78,400
net income = 0
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Prepare a contribution margin income statement for the...
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Ritchie Manufacturing Company makes a product that it sells for
$190 per unit. The company incurs variable manufacturing costs of
$96 per unit. Variable selling expenses are $18 per unit, annual
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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...
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