Question

Sales TI SI JO. b. Would you recommend that the change be made? Explain. PROBLEM 3-20 Basics of CVP Analysis; Cost Structure [LO 3-1, LO 3-3, LO 3-4, LO 3-5, LO 3-6] Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (13,500 units at $20 per unit) ....... Variable expenses ....... Contribution margin .... Fixed expenses ....... Net operating loss ..... $270,000 189,000 81,000 90,000 $ (9,000)

Answer 1

Break even point

Contribution ratio = 81000/270000*100 = 30%

In anount = $90000/30% = $300000

In units = $300000/$20 = 15000 units

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