Chapter 21, Problem 19E

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  $\text{Contribution Margin per unit = Sales price – Variable cost per unit}$

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  $Breakevenpoint\left(Units\right)=\frac{TotalFixedcosts}{Contributionmarginperunit}$

  $Breakevenpoint\left(Dollar\right)=\frac{TotalFixedcosts}{Contributionmarginratio}$

Requirement-1:

The Contribution margin per unit

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  $\text{Contribution Margin per unit = Sales price – Variable cost per unit}$

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  $Breakevenpoint\left(Units\right)=\frac{TotalFixedcosts}{Contributionmarginperunit}$

  $Breakevenpoint\left(Dollar\right)=\frac{TotalFixedcosts}{Contributionmarginratio}$

Requirement-2:

The Contribution margin Ratio

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  $\text{Contribution Margin per unit = Sales price – Variable cost per unit}$

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  $Breakevenpoint\left(Units\right)=\frac{TotalFixedcosts}{Contributionmarginperunit}$

  $Breakevenpoint\left(Dollar\right)=\frac{TotalFixedcosts}{Contributionmarginratio}$

Requirement-3:

Breakeven Point in units

To determine

Concept Introduction:

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

  $\text{Contribution Margin per unit = Sales price – Variable cost per unit}$

Breakeven point:

The Breakeven point is level of sales at which the net profit is zero. In other words, the breakeven point is the amount of sales at which there no loss and no profit. The formulas to calculate breakeven point are as follows:

  $Breakevenpoint\left(Units\right)=\frac{TotalFixedcosts}{Contributionmarginperunit}$

  $Breakevenpoint\left(Dollar\right)=\frac{TotalFixedcosts}{Contributionmarginratio}$

Requirement-4:

Breakeven Point in Dollar