Calculating Contribution Margin and Contribution Margin Ratio; Identifying Break-Even Point, Target Profit
Paddle Away, Inc., makes one model of wooden canoe. Partial information for it follows.
Number of canoes produced and sold Total costs | 450 | 600 | 750 |
Variable costs | $ 67,500 | ? | ? |
Fixed costs | 150,000 | ? | ? |
Total costs | $217,500 | ? | ? |
Cost per unit | |||
Variable cost per unit | ? | ? | ? |
Fixed cost per unit | ? | ? | ? |
Total cost per unit | ? | ? | ? |
Required:
1.Complete the preceding table.
2.Suppose Paddle Away sells its canoes for $550 each. Calculate the contribution margin per canoe and the contribution margin ratio.
3.This year Paddle Away expects to sell 820 canoes. Prepare a contribution margin income statement for the company.
4.Calculate Paddle Away’s break-even point in units and in sales dollars.
5.Suppose Paddle Away wants to earn $75,000 profit this year. Calculate the number of canoes that must be sold to achieve this target.
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