Bowser Inc. manufacures an electronic harmonica. The following income statement shows their expected financial results at...
Homework Answers
Solution:
Variable manufacturing cost per unit = ($70,000 - $50,000) / (1500 - 1000) = $40 per unit
Fixed manufacturing cost = $50,000 - 1000*$40 = $10,000
Variable selling and administrative cost = ($46,000 - $41,000) / (1500 - 1000) = $10 per unit
Fixed selling and administrative cost = $41,000 - (1000 * $10) = $31,000
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $100 - ($40 + $10) = $50 per unit
Breakeven point in units = Fixed costs / Contribution margin per unit
= ($10,000 + $31,000) / $50 = 820 units
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