Question

5 Sandy Bank, Inc., makes one model of wooden canoe. Partial Information is given below. 1.36 points Required: 1. Complete the following table. 2. Suppose Sandy Bank sells its canoes for $500 each. Calculate the contribution margin per canoe and the contribution margin ratio. 3. This year Sandy Bank expects to sell 800 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 $67,000 profit this year. Calculate the number of canoes that must be sold to achieve this target. eBook Hint Complete this question by entering your answers in the tabs below. Print References Required 1 Required 2 Required 3 Required 4 Required 5 Complete the following table. (Round your "Cost per Unit" answers to 2 decimal places.) 480 640 730 Number of Canoes Produced and Sold Total costs Variable Costs Fixed Costs S 73,440s 153 s S 100 154,080 154,080 154,080 227,520 5 Total Costs s 154,233 $ 154,180 Cost per Unit Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit S 0.00 $ 0.00 $ 0.00 < Required 1 Required 2 >

Answer 1

1) Calculate following

Number of Canoes produced and sold	480	640	730
Total costs
variable cost	73440	97920	111690
Fixed cost	154080	154080	154080
Total Cost	227520	252000	265770
Cost per unit
Variable cost	153	153	153
Fixed cost	321	240.75	211.07
Total cost per unit	474	393.75	364.07

b) Unit contribution margin = 500-153 = 347

Contribution margin ratio = 347/500 = 69.4%

c) Contribution margin income statement

Sales (800*500)	400000
Variable cost (800*153)	122400
Contribution margin	277600
Fixed cost	154080
Operating income	123520

d) Break even unit = 154080/347 = 444 Units

Break even sales = 444*500 = 222000

e) Target sales unit = (154080+67000)/347 = 637 Units