Please follow chart layout Blanchard Company manufactures a single product that

Question

Please follow chart layout

Blanchard Company manufactures a single product that sells for $208 per unit and whose total variable costs are S156 per unit. The company's annual fixed costs are $806,000. 15.500 units were sold. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) of sales Sales Contribution margin (2) Assume the company's fixed costs increase by $140,000. What amount of sales in dollars) is needed to break even? Break-even point in dollars Choose Denominator: hoose Numerator: Break-even point in dollars Break-even point in dollars

Explanation / Answer

(1) Contribution Margin Income statement at Break Even Point

(2)

Break-even point in dollar = Fixed Costs / Contribution margin in percentage

= ($806000 + $140000) / [($208 - $156) / $208] = $3784000

Amount $ % of Sales Sales (15500 * 208) $3224000 100% Less: Variable Costs (15500 * $156) ($2418000) 75% Contribution Margin $806000 25% Less: Fixed costs ($806000) 25% Net Operating Income $0 0%

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