Question

# Blanchard Company manufactures a single product that sells for \$100 per unit and whose total variable...

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 %

(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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