Question

Blanchard Company manufactures a single product that sells for
$100 per unit and whose total variable costs are $76 per unit. The
company’s annual fixed costs are $338,400.

(1) Prepare a contribution margin income statement for Blanchard
Company at the break-even point.

BLANCHARD COMPANY | ||

Contribution Margin Income Statement (at Break-Even) | ||

Amount | Percentage of sales | |

% | ||

Sales Variable costs Contribution margin Fixed costs |
$ |

(2) Assume the company’s fixed costs increase by $126,000. What amount of sales (in dollars) is needed to break even?

Break-Even Point in Dollars | ||||

Choose Numerator: | / | Choose Denominator: | = | Break-Even Point in Dollars |

/ |
Contribution margin ratio Fixed costs per unit Selling price per unit Total fixed costs Variable costs per unit |
= | Break-even point in dollars | |

% |

Answer #1

(1)

BLANCHARD COMPANY

Contribution Margin Income Statement (at Break-Even)

Amount | Percentage of sales | |

Sales(14,100 * $100) | $1,410,000 | 100% |

Variable costs(14,100 * $76) | $1,071,600 | 76% |

Contribution margin | $338,400 | 24% |

Fixed costs | $338,400 | |

Net income | $0 |

(2) Break-Even Point in Dollars

Choose Numerator: | / | Choose Denominator: | = | Break-Even Point in Dollars |

Total fixed costs | / | Contribution margin ratio | = | Break-Even Point in Dollars |

$338,400 | / | 24% | = | $1,410,000 |

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