Use the information from the following Income Statement to solve for the questio

Question

Use the information from the following Income Statement to solve for the questions at bottom of the page.      Complete the grey sections Income Statement Sales Revenue $2,250,000 Variable Costs Purchases $425,000 Direct labor $395,000 $820,000 $1,430,000 Fixed Costs Selling $175,000 Administrative $110,000 $285,000 The above is based on sales of 20,000 units. 1. Contribution Margin 2. Selling price per unit 3. Variable labor cost per unit 4. Variable purchases cost per unit 5. Breakeven point in units and dollars Use the information from the following Income Statement to solve for the questions at bottom of the page.      Complete the grey sections Income Statement Sales Revenue $2,250,000 Variable Costs Purchases $425,000 Direct labor $395,000 $820,000 $1,430,000 Fixed Costs Selling $175,000 Administrative $110,000 $285,000 The above is based on sales of 20,000 units. 1. Contribution Margin 2. Selling price per unit 3. Variable labor cost per unit 4. Variable purchases cost per unit 5. Breakeven point in units and dollars

Explanation / Answer

1. Contribution Margin

= Sales – Variable costs

= $2,250,000 / $820,000

= $1,430,000

2. Selling price per unit

= Sales Revenue / Number of units

= $2,250,000 / 20,000 Units

= $112.50 per unit

3. Variable labor cost per unit       

= Variable labor cost / Number of units

= $395,000 / 20,000 Units

= $19.75 per unit

4. Variable purchases cost per unit

= Variable purchases cost / Number of units

= $425,000 / 20000 Units

= $21.25 per unit

5. Breakeven point in units and dollars

Contribution per unit

= Contribution Margin / Number of units

= $1,430,000 / 20,000 Units

= $71.50 per unit

Contribution ratio = 71.50 / 112.50 = 63.55%

Breakeven point in units = Fixed Costs / Contribution per unit

= $285,000 / 71.50

=3986 Units                           

Breakeven point in Dollars = Fixed Costs / Contribution ratio

= $285,000 / 0.6355

= $ 448466

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