Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (40,000 units @ $31.00) Total variable cost Contribution margin Total fixed cost Operating income $ (60,512) 1. Compute the unit contribution margin and the units that must be sold to break even. Unit contribution margin Break-even units $1,240,000 483,600 $756,400 816,912 2. Suppose 10,000 units are sold above breakeven. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. Contribution margin ratio Break-even sales revenue Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (40,000 units @ $31.00) Total variable cost Contribution margin Total fixed cost Operating income $ (60,512) 1. Compute the unit contribution margin and the units that must be sold to break even. Unit contribution margin Break-even units $1,240,000 483,600 $756,400 816,912 2. Suppose 10,000 units are sold above breakeven. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. Contribution margin ratio Break-even sales revenue Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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D.22.
Transcribed Image Text:Basic Cost-Volume-Profit Concepts
Klamath Company produces a single product. The projected income statement for the coming year is as follows:
Sales (40,000 units @ $31.00)
$1,240,000
Total variable cost
483,600
Contribution margin
$ 756,400
Total fixed cost
816,912
Operating income
$ (60,512)
1. Compute the unit contribution margin and the units that must be sold to break even.
Unit contribution margin
Break-even units
2. Suppose 10,000 units are sold above breakeven. What is the operating income?
3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales
revenue.
Contribution margin ratio
Break-even sales revenue
Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income
be?
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