Question

Christina Company reports the contribution margin income statement for 2020 below. Using this information, compute Christina Company's 1) break-even point in units, 2) break-even point in sales dollars, 3) unit sales to achieve target pretax income, and 4) dollar sales to achieve target pretax income.

Units $ per unit Total Sales 1,700 $200 $340,000

Variable costs 1,700 130 221,000

Contribution margin 119,000

Fixed costs 84,000

Pretax income $35,000

I need the formulas to plug into excel

1) Compute the break-even point in units
2) Compute the break-even point in sales dollars
Target pretax income
Sales (units) to achieve targeted pretax income of $56,000
Sales (dollars) to achieve targeted pretax income of $56,000

Answer 1

contribution per unit =119000/1700= 70 per unit

contribution margin =119000/340000*100=35%

1) break even point in units = fixed cost / contribution per unit

=84000/70

=1200 units

2) break even point in sales dollars = fixed cost / contribution margin ratio

= 84000/35%

=240000

3)target sales in units = target profits + fixed costs / contribution per unit

=56000+84000/70

=2000 units

4) target sales in dollars = target profits + fixed costs / contribution margin ratio

= 56000+84000/35%

=400000