Blanchard Company manufactures a single product that sells for $110 per unit and
ID: 2510394 • Letter: B
Question
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company’s annual fixed costs are $308,000.
(1) Prepare a contribution margin income statement for Blanchard Company at the break-even point.
Sales
Variable costs
Contribution margin
Fixed costs
Net income
Sales
Variable costs
Contribution margin
Fixed costs
Net income
Sales
Variable costs
Contribution margin
Fixed costs
Sales
Variable costs
Contribution margin
Fixed costs
Net income
Sales
Variable costs
Contribution margin
Fixed costs
Net income
(2) Assume the company’s fixed costs increase by $125,000. What amount of sales (in dollars) is needed to break even?
Contribution margin ratio
Fixed costs per unit
Selling price per unit
Total fixed costs
Variable costs per unit
Contribution margin ratio
Fixed costs per unit
Selling price per unit
Total fixed costs
Variable costs per unit
BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of salesSales
Variable costs
Contribution margin
Fixed costs
Net income
Sales
Variable costs
Contribution margin
Fixed costs
Net income
%Sales
Variable costs
Contribution margin
Fixed costs
%Sales
Variable costs
Contribution margin
Fixed costs
Net income
Sales
Variable costs
Contribution margin
Fixed costs
Net income
$Explanation / Answer
1 BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales Sales $1,540,000 100% Variable costs $1,232,000 80% Contribution margin 308,000 20% Fixed costs 308,000 Net income 0 2 Break-even point in dollars Choose Numerator: / Choose Denominator: = Break-even point in dollars Total fixed costs / Contribution margin ratio = Break-even point in dollars $433,000 / 20% = $2,165,000
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