Question

$170 per unit. The company incurs variable manufacturing costs of $83 per unit. Variable selling expenses are $19 per unit, annual fixed manufacturing costs are $498.000, and fixed selling and administrative costs are $236.400 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Prepare a contribution margin income statement for the break-even sales volume. Complete this question by entering your answers in the tabs below. Reg A to B Reg C Determine the break-even point in units and dollars using the equation method, the contribution margin per unit approach and the contribution margin ratio approach. a. Break-even point in units Break-even point in dollars Contribution margin per unit Break-even point in units Break-even point in dollars

Answer 1

170 102 734400 Selling Price Per unit Varaibel Expense Per unit (83+19) Fixed Expenses (498000+236400) Compute the CM ratio and Varaible Expense ratio Selling Price Per unit Varaibel Expense Per unit (83+19) Contribution Margin per unit ( Selling Price - Varible Cost) CM Ratio (CM/Selling Price) Equation Method a Break Even in Unit Sales Fixed Cost/(selling price - Variablecost) Break Even in Dollar sales = (selling Price* BEP Units) CM Per Units Method Method b Contribution Margin per unit ( Selling Price - Varible Cost) | Break Even in Unit Sales =( Fixed Cost / CM Per unit) Break Even in Dollar sales =( Units *Selling price) 170 102 68 40% 10800 Units 1836000 Dollars 68 10800 Units 1836000 Dollars

Contibution Income Statement at Break Even Point Total Selling Price (10800*170) 1836000 Varaible Cost (10800*102) 1101600 Contribution Margin 734400 Fixed cost 734400 Net operating income