Break-Even Point in Units Chillmax Company plans to sell 3,500 pairs of shoes at

Question

Break-Even Point in Units Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to break even by using the break-even point in sales equation. $ 2. Prepare a contribution margin income statement based on the break-even point in sales dollars. Enter all amount as a positive number. Break-Even Point in Units Chillmax Company plans to sell 3,500 pairs of shoes at S60 each in the coming year. variable cost is 3S96 of the sales price; contribution margin is 6s% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to break even by using the break-even point in sales equation. 2. Prepare a contribution margin income statement based on the break-even point in sales dollars. Enter all amount as a positive number. Chillmax Company Contribution Margin Income Statement At Break-Even Point Total Sales Total variable cost Total contribution margin Total fxed cost Operating income Check My Work Previous Next

Explanation / Answer

1) Break even sales

Break even sales = Total variable expense+Total fixed cost

X = 0.35X+78000

0.65X = 78000

X(Break even sales) = 120000

2) Contribution margin income statment :

Sales 120000 Variable cost 42000 Contribution margin 78000 Fixed cost 78000 Operating income 0

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