Break-Even in Units and Sales Dollars, Margin of SafetyDrake Company produces a single product. Last year's income statement is as follows:Sales (21,000 units)$1,295,700Less: Variable costs856,800 Contribution margin$438,900Less: Fixed costs250,300 Operating income$188,600Required:1. Compute the break-even point in units and sales revenue. In your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal places. Round your final answers to the nearest whole unit or dollar.Break-even units fill in the blank unitsBreak-even dollars$fill in the blank 2. What was the margin of safety in dollars for Drake Company last year? Round your final answer to the nearest whole dollar.$fill in the blank 3. Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $213,200 per year, but will lower variable costs to 50 percent of sales. Units sold will remain unchanged.What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.fill in the blank units

Break even point is a point where no profit/no loss condition arise. In other words, it is a point…

Answered: Drake Company produces a single…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 47E: Klamath Company produces a single product. The projected income statement for the coming year is as...

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Break-Even in Units and Sales Dollars, Margin of Safety

Drake Company produces a single product. Last year's income statement is as follows:

Sales (21,000 units)	$1,295,700
Less: Variable costs	856,800
Contribution margin	$438,900
Less: Fixed costs	250,300
Operating income	$188,600

Required:

1. Compute the break-even point in units and sales revenue. In your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal places. Round your final answers to the nearest whole unit or dollar.

Break-even units	fill in the blank	units
Break-even dollars	$fill in the blank

2. What was the margin of safety in dollars for Drake Company last year? Round your final answer to the nearest whole dollar.
$fill in the blank

3. Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $213,200 per year, but will lower variable costs to 50 percent of sales. Units sold will remain unchanged.

What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
fill in the blank units

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