Question

Billings Company has the following information available for September 2017.

Unit selling price of video game consoles		$440
Unit variable costs		$308
Total fixed costs		$59,400
Units sold		660

Compute the unit contribution margin.

AND

Prepare a CVP income statement that shows both total and per unit amounts.

AND

Compute Billings’ break-even point in units.

AND

Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Answer 1

Particulars	Amount
Unit selling price	440
Unit variable cost	308
Total fixed costs	59400
Units sold	660
Unit contribution margin=	Contribution per unit
	Selling price per unit
Contribution per unit=	Selling price per unit-Variable cost per unit
	440-308
	132
Unit contribution margin=	132
	440
	30%
Income statement
Particulars	Total	Per unit
Sales	290400	440
	(660*440)
Less: Variable cost	203280	308
	(660*308)
Contribution	87120	132
Less: Fixed Cost	59400	90
		(59400/660)
Net profit/(loss)	27720	42
Break even point in units=	Total fixed cost
	Contribution per unit
	59400
	132
	450	units
Income statement at break even point level
Particulars	Total	Per unit
Sales	198000	440
	(450*440)
Less: Variable cost	138600	308
	(450*308)
Contribution	59400	132
Less: Fixed Cost	59400	132
		(59400/450)
Net profit/(loss)	0	0