Chapter 21, Problem 11E

To determine

A contribution margin income statement is a statement which shows the profit or loss for a entity for a particular product or overall performance. In contribution margin variable cost is deducted from the sales and net income is calculated. Contribution is having direct relation with sales and variable cost. The impact of all other expenses other than variable cost is irrelevant for calculation of contribution.

The contribution margin ratio means calculated contribution in terms of percentage. The numerator part will be contribution amount and denominator part will net sales.

The break-even point formula is calculated as the total fixed costs of production part in numerator and price per unit less the variable costs to produce the product in denominator.

To Calculate:

Break- even point in units and in dollars calculated is asked to be calculated in the specific question to prepare contribution margin income statement.