Answer:
1. $ 6.40
2. 68% and 32%
3. 7,000
4. <u>a contribution margin income statement at the break-even number of units</u>
Sales (7,000×$20.00) 140,000
Less Variable Costs (7,000×$6.40) (44,800)
Contribution 95,200
Less Fixed Costs ($56,590+$38,610) (95,200)
Net Income 0
Explanation:
the variable cost per unit and the contribution margin per unit.
<u>variable cost per unit</u>
Direct materials 2.10
Direct labor 1.25
Variable factory overhead 2.00
Variable selling and administrative expense 1.05
Total 6.40
<u>contribution margin per unit</u>
contribution margin per unit = Sales - Variable Cost
= $20.00 - $ 6.40
= $13,60
the contribution margin ratio and the variable cost ratio
<u>contribution margin ratio</u>
contribution margin ratio = Contribution / sales × 100
= $13,60/$20.00× 100
= 68%
<u>variable cost ratio</u>
variable cost ratio = variable cost / sales × 100
= $6.40/$20.00× 100
= 32%
<u>the break-even units</u>
break-even units = fixed costs / contribution margin per unit
= ($56,590+$38,610)/ $13,60
= 7,000
<u>a contribution margin income statement at the break-even number of units</u>
Sales (7,000×$20.00) 140,000
Less Variable Costs (7,000×$6.40) (44,800)
Contribution 95,200
Less Fixed Costs ($56,590+$38,610) (95,200)
Net Income 0