Xcite Equipment Co. manufactures and markets a number of rope products. Manageme

Question

Xcite Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $150 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $200,000, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $100 per 100 yards of XT rope.

1. Estimate Product XT's break-even point in terms of sales units. (1 unit 100 yards.) (Do not round intermediate calculations.) Contribution margin per 100 yds Contribution margin Contribution margin ratio Choose Numerator: I Choose Denominator: Contribution margin ratio Contribution marg in ratio 1 (a) Estimate Product XT's break-even point in terms of sales units. (1 unit = 100 yards) (Round to nearest whole unit) Choose Numerator: 1 Choose Denominator: Break-even units Break-even units 1(b) Estimate Product XT's break-even point in terms of sales dollars. 1 Choose Numerator: Choose Denominator: Break-even doll ars Break-even dollars

Explanation / Answer

Income Statement At Break even Point sales Level 4000 Units

Contrbution margin selling price 150 variable costs 100 Contribution margin 50

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