Answer :
Break even units = 10,500
Break even amount = $2,100,000
Explanation :
As per the data given in the question,
a) Break even units = Fixed expense ÷ CM per unit b ÷ (a - c)
= ($466,000 + $269,000) ÷ ($200 - $110 - $20)
= 10,500 units
b) Break even amount = b ÷ (a ÷ c)
= ($466,000 + $269,000) ÷ ($70 ÷ $200)
= $2,100,000
Contribution margin ratio = Contribution margin ÷ Selling price per unit × 100
where,
Contribution margin = Selling price per unit - variable expenses per unit
c) CM per unit Break even units = Fixed expense ÷ Cm per unit
= $735,000 ÷ $70
= 10,500 units
Break even dollars = Fixed expense ÷ Contribution margin ratio
= $735,000 ÷ 0.35
= $2,100,000
d) Contribution margin income statement:
Sales = 10,500 × $200 = $2,100,000
Less Variable expenses 10,500 × ($110+$20) = $1,365,000
Contribution margin $735,000
Less Fixed Expense $735,000
Net Operating Income = $0
