Tools Window Seac s in dule11 Homework Help Save & ExitSub Check my wor 2 Ritchi
ID: 2557532 • Letter: T
Question
Tools Window Seac s in dule11 Homework Help Save & ExitSub Check my wor 2 Ritchie Manufacturing Company makes a product thet it sells for $150 per unit. The company Incurs variable manufacturing costs of $67 per unit. Variable selling expenses are $14 per unit, annual fixed manufacturing costs are $454,000, and fixed selling and administrative costs are $277,400 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. Req A to B1 Req C Determine the break-even point in units and dolars using the equation method, the contribution margin per unit approach and the contribution margin ratio approach Break-even point in dolars margin per unt Dreak-even point in unts Break even point in dollars MacBook Pro 5 6 8Explanation / Answer
a) Calculation of break even point in unit sales: Equation method px=vx+FC where p= Selling price= 150 v= variable cost per unit= 67+14=81 FC= fixed cost= 454000+277400=731400 x= break even point in unit sales 150*x=81*x+731400 69*x=731400 x=731400/69=10600 Break even point in unit sales= 10600 units Calculation of break even point in dollar sales: Break even point in dollar sales= vx+FC = (81*10600)+731400=1590000 Break even point in dollar sales=$1590000 b) Calculation of break even point in units: Contribution per unit= Selling price- variable cost per unit = 150-81=$69 Break even sale in units= Fixed cost/ contribution per unit = 731400/69=10600 Break even point in unit sales= 10600 units Calculation of break even point in dollars: Break even point in dollar sales= Break even point in units* selling price =10600*150=$1590000 Break even point in dollar sales=$1590000 c) Contribution Margin Income statement Particulars Amount($) Sales(10600*150) 1590000 Less: Variable Cost(10600*81) 858600 Contribution (1590000-858600) 731400 Less: Fixed Cost(454000+277400) 731400 Operating Profit 0