Adams Company makes and sells products with variable costs of $24 each. Adams incurs annual fixed...
Adams Company makes and sells products with variable costs of $24 each. Adams incurs annual fixed costs of $321,280. The current sales price is $88.
Note: The requirements of this question are interdependent. For example, the $256,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements.
Required
a. Determine the contribution margin per unit.
Complete this question by entering your answers in the tabs below.
Determine the break-even point in units and in dollars. (Do not round intermediate calculations. Round your final answers to the nearest dollar and round units up to the next whole unit.)
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Prepare an income statement using the contribution margin format. (Do not round intermediate calculations. Round your final answers to nearest whole number.)
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Homework Answers
| a | ||
| Contribution margin per unit | 64 | =88-24 |
| Fixed costs | 321280 | |
| / Contribution margin per unit | 64 | |
| Break-even point in units | 5020 | |
| Break-even point in dollars | 441760 | =5020*88 |
| b | ||
| ADAMS COMPANY | ||
| Income Statement | ||
| Sales revenue | 441760 | =5020*88 |
| Variable costs | 120480 | =5020*24 |
| Contribution margin | 321280 | |
| Fixed costs | 321280 | |
| Net income(loss) | 0 |
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