Question

Pharoah Company has the following information available for September 2020. 

Unit selling price of video game consoles	$520
Unit variable costs	$364
Total fixed costs	$48,360
Units sold	600

Compute the unit contribution margin. 

Unit contribution margin _______ 

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

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

Answer 1

Unit contribution margin = Unit selling price – Unit Variable Cost = 520-364 = $156

CVP income statement

	Total [600units]	Per Unit
Sales	312,000	520
Variable Costs	- 218,400	364
Contribution Margin	93,600	156
Fixed Costs	-48,360
Net Income	45,240

Break even point in units = Total Fixed costs/Unit Contribution Margin= 48,360/156 = 310 units

CVP income statement at break even point i.e. 310 units

	Total [310 units]	Per Unit
Sales	161,200	520
Variable Costs	- 112,840	364
Contribution Margin	48,360	156
Fixed Costs	-48,360
Net Income	0