Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price= $24.
Unit costs are as follows:
Direct materials $4.98
Direct labor 2.10
Variable factory overhead 1.00
Variable selling and administrative expense 2.00
Total unitary variable cost= $10.08
Total fixed factory overhead= $26,500
Total fixed selling and administrative expense= $15,260.
a. Variable cost per unit= 4.98 + 2.1 + 1 + 2= $10.08
Unitary contribution margin= 24 - 10.08= $13.92
b.
Contribution margin ratio= contribution margin / selling price
Contribution margin ratio= 13.92 / 24= 0.58
Variable cost ratio= unitary variable cost / selling price
Variable cost ratio= 10.08 / 24= 0.42
<u>c. To calculate the break-even point in units, we need to use the following formula:</u>
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= (26,500 + 15,260) / 13.92
Break-even point in units= 3,000
<u>d. Finally, the contribution margin income statement:</u>
Sales= 3,000*24= 72,000
Total variable cost= 3,000*10.08= (30,240)
Contribution margin= 41,760
Total fixed factory overhead= (26,500)
Total fixed selling and administrative expense= (15,260)
Net operating income= 0
