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
Related questions
Question
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 |
$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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education