Blanchard Company manufactures a single product that sells for $150 per unit and

Question

Blanchard Company manufactures a single product that sells for $150 per unit and whose total variable costs are $120 per unit. The company's annual fixed costs are $471,000 (a) Compute the company's contribution margin per unit. Contribution margin (b) Compute the company's contribution margin ratio Choose Denominator: Choose Numerator: Contribution Margin Ratio Contribution margin ratio (c) Compute the company's break-even point in units. Choose Numerator: Choose Denominator: Break-Even Units Break-even units (d) Compute the company's break-even point in dollars of sales. Choose Numerator: Break-Even Dollars Break-even dollars

Explanation / Answer

(a) Compute the company's contribution margin per unit. Sales per unit $150 per unit Less: Variable cost per unit 120 per unit Contribution margin $30 per unit (b) Compute the company's contribution margin ratio. Choose Numerator: / Choose Denominator: = Contribution margin ratio Contribution margin per unit / Sales per unit = Contribution margin ratio $30 / $150 = 20% (c) Compute the company's break-even point in units. Choose Numerator: / Choose Denominator: = Break-even units Fixed costs / Contribution margin per unit = Break-even units $471,000 / $30 = 15700 units (d) Compute the company's break-even point in dollars of sales. Choose Numerator: / Choose Denominator: = Break-even dollars Fixed costs / Contribution margin ratio = Break-even dollars $471,000 / 20% = $2,355,000

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