Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. d. Confirm your results by preparing a contribution margin income statement for the break-even sales volume.
Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. d. Confirm your results by preparing a contribution margin income statement for the break-even sales volume.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Need help with c + d**
Transcribed Image Text:Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable
manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are
$480,000, and fixed selling and administrative costs are $240,000 per year.
Required
Determine the break-even point in units and dollars using each of the following approaches:
a. Use the equation method.
b. Use the contribution margin per unit approach.
c. Use the contribution margin ratio approach.
d. Confirm your results by preparing a contribution margin income statement for the break-even sales volume.
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