Question

E6-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio; Identifying Break-Even Point, Target Profit [LO 6-1, 6-2] Sandy Bank, Inc., makes one model of wooden canoe. Partial information is given below. Required: 1. Complete the following table. 2. Suppose Sandy Bank sells its canoes for $590 each. Calculate the contribution margin per canoe and the contribution margin ratio. 3. This year Sandy Bank expects to sell 760 canoes. Prepare a contribution margin income statement for the company. 4. Calculate Sandy Bank's break-even point in units and in sales dollars. 5. Suppose Sandy Bank wants to earn $72,000 profit this year. Calculate the number of canoes that must be sold to achieve this target. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the following table. (Round your "Cost per Unit" answers to 2 decimal places.) 410 610 790 Number of Canoes Produced and Sold Total costs Variable Costs $ Fixed Costs 63,960 133,660 197,620 $ Total Costs $ 0 $ 0 Cost per Unit Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit $ 0.00 $ 0.00 $ 0.00 Required Required 2 >

Answer 1

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Sandy Bank
Answer 1
Variable cost per unit	Amount $	Note
Variable costs	63,960.00	A
Number of units	410.00	B
Variable cost per unit	156.00	C=A/B
Fixed cost per unit	Amount $
Fixed costs	133,660.00	D
Number of units	410.00	See B
Fixed cost per unit	326.00	E=D/B
Total cost per unit	482.00	F=C+E
When 610 units	Amount $
Variable cost per unit	156.00	See C
Fixed cost per unit	Amount $
Fixed costs	133,660.00	See D
Number of units	610.00	G
Fixed cost per unit	219.11	H=D/G
Total cost per unit	375.11	I=C+H
Variable cost per unit	156.00	See C
Number of units	610.00	See G
Variable cost	95,160.00	J=C*G
Fixed cost	133,660.00	See D
Total cost	228,820.00	K=J+D
When 790 units	Amount $
Variable cost per unit	156.00	See C
Fixed cost per unit	Amount $
Fixed costs	133,660.00	See D
Number of units	790.00	L
Fixed cost per unit	169.19	M=D/L
Total cost per unit	325.19	N=C+M
Variable cost per unit	156.00	See C
Number of units	790.00	See L
Variable cost	123,240.00	O=C*L
Fixed cost	133,660.00	See D
Total cost	256,900.00	P=O+D
Answer 2	Amount $
Sell price	590.00	Q
Less: Variable cost per unit	156.00	See C
Contribution margin per unit	434.00	R
Contribution margin ratio	73.56%	S=R/Q
Answer 3	Amount $
Number of units	760.00	T
Sell price	590.00	See Q
Sales value	448,400.00	U=Q*T
Variable cost per unit	156.00	See C
Total Variable cost	118,560.00	V=C*T
Income Statement	Amount $
Sales	448,400.00	See U
Less: Variable costs	118,560.00	See V
Contribution margin	329,840.00
Less: Fixed costs	133,660.00	See D
Income from operations	196,180.00
Answer 4	Amount $
Contribution margin per unit	434.00	See R
Fixed costs	133,660.00	See D
Break-even point (units)	308.00	W=R/D
Break-even point ($)	181,720.00	X=W*Q
Answer 5	Amount $
Fixed costs	133,660.00	See D
Desired profit	72,000.00	Y
Desired Contribution	205,660.00	Z=D+Y
Total units to be sold	474.00	AA=Z/R