Question

E18-13 Cannes Company has the following information available for September 2014 Unit selling price of video game consoles $ 400 Unit variable costs $ 275 Total fixed costs $52,000 Units sold 600 Instructions (a) Compute the contribution margin per unit. (b) Prepare a CVP income statement that shows both total and per unit amounts. (c) Compute Cannes' break-even point in units. (d) Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Answer 1

Please find below the solution...

Answer a)	Contribution margin per unit
	Sales	400
	Less: Variable cost	-275
	Contribution per unit	125
Answer b)
	CVP income statement
	Particular	Per unit	Total (600 unit)
	Sales	400.00	240,000
	Less: Variable cost	(275.00)	(165,000)
	Contribution Margin	125.00	75,000
	Less : Fixed cost	(86.67)	(52,000)
	Net income	38.33	23,000
Answer c)
	Break even point in units = Fixed cost / Contribution margin per unit
		=52000/125
		416	Unit
Answer d)
	CVP income statement
	Particular	Per unit	Total (416 unit)
	Sales	400.00	166,400
	Less: Variable cost	(275.00)	(114,400)
	Contribution Margin	125.00	52,000
	Less : Fixed cost	(125.00)	(52,000)
	Net income	-	-