Basic Break-Even Calculations Suppose that Larimer Company sells a product for $24. Unit costs are as follows: Direct materials $4.42 Direct labor $2.90 Variable factory overhead $1.50 Variable selling and administrative expense $2.60 Total fixed factory overhead is $20,500 per year, and total fixed selling and administrative expense is $10,950.
Basic Break-Even Calculations Suppose that Larimer Company sells a product for $24. Unit costs are as follows: Direct materials $4.42 Direct labor $2.90 Variable factory overhead $1.50 Variable selling and administrative expense $2.60 Total fixed factory overhead is $20,500 per year, and total fixed selling and administrative expense is $10,950.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Basic Break-Even Calculations
Suppose that Larimer Company sells a product for $24. Unit costs are as follows:
| Direct materials | $4.42 | |
| Direct labor | $2.90 | |
| Variable factory overhead | $1.50 | |
| Variable selling and administrative expense | $2.60 |
Total fixed factory overhead is $20,500 per year, and total fixed selling and administrative expense is $10,950.
Transcribed Image Text:1. Calculate the variable cost per unit and the contribution margin per unit. Round your answers to the nearest cent.
Unit Variable Cost
Unit Contribution Margin
2. Calculate the contribution margin ratio and the variable cost ratio. Round your answers to the nearest whole number.
Contribution Margin Ratio
%
Variable Cost Ratio
%
3. Calculate the break-even units. Round your answer to the nearest whole number.
Break-Even Units
units
4. Prepare a contribution margin income statement at the break-even number of units. If your answer is zero, enter 0. Round your answers to the nearest dollar.
Larimer Company
Contribution Margin Income Statement
At Break-Even
Sales v
Variable Cost v
Total Contribution Margin v
Fixed Cost
Operating Income v
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